The Franchisor: You Need To Know That

A well-engineered business idea seeks rapid dissemination: this is a franchise from the franchisor’s point of view.

What is a franchisor?

As a franchisor, you are an entrepreneur like everyone else – but with one important difference: you grant the right to exercise your business concept to franchisees who are also independent entrepreneurs.

Seen in this way, the franchisor is the general entrepreneur who helps himself and his franchisee to be successful in the market with a mature business idea.

The respective business concept, in whatever industry, and with whatever legal form, must have been put through its paces in a pilot operation. Success must be proven according to hard criteria such as turnover and profit.

However, not every business idea can be implemented everywhere. To determine whether a business concept also works in different locations, the system provider has to check, document, and optimize its processes over and over again.

All of his knowledge and the success of his concept should be incorporated into a manual that is made available to all franchisees. This “bible” of the respective system is the clearest sign of a serious franchisor.

Successful franchise systems are also characterized by the fact that the franchisor offers the franchisees a comprehensive training and support package.

To a certain extent, this is the compensation for the fact that the franchisor gives his franchise partners certain requirements, for example, with regard to the uniform appearance on the market. In addition, the system provider requires the franchisees to pay a so-called entry fee so that they can use its business concept.

A franchise system cannot be built up from now on. This requires large financial and human resources. The aim is to make the system brand known quickly – and thus to win over franchisees.

How do you become a franchisor?

Anyone who is thinking of building a franchise system or becoming a franchisor should have had success as an entrepreneur before.

Otherwise, the step out of the employment relationship to the franchisor is too big. This means that the entrepreneur has already been able to inspire a group of people for his product or service. Of course, this also means that the respective person can motivate their employees.

As a system provider, it also means building a very strong brand and letting other companies participate. A prerequisite for being able to take this step is to have carried out in-depth market studies.

Can the franchise concept really prevail against other competitors? The franchisor should be aware that the respective franchise system should work in a wide variety of locations. The business should also be operationalizable.

The franchisor should be able to train the first franchisees extensively, especially at the beginning, and to familiarize them with his business concept. Of course, the franchise system should also generate nice returns.

All of this takes time. According to franchise experts, it takes between 450 and 510 days to set up a franchise system.

How do you recognize a successful franchisor?

Not every company that is growing rapidly and about which the press reports a lot is also a serious company. A company is reputable primarily through a stable financing situation. A strong brand is also a clear indication that the company is successful and works seriously in the long term.

In franchising, in particular, the cooperation between the franchisor and the franchisee is a crucial basis for the system’s success. Only a franchisor who has professional, permanent training offers for the franchisee and who is available at any time to answer questions is a good, trustworthy franchise partner.

Among other things, the joint task is to implement sales promotion measures and standardize operational processes. Last but not least, the USP of a successful entrepreneur characterizes his business. Only those who have the market idea that nobody has come up with will be successful.

Can I become a franchisor with my business model?

Are you already an entrepreneur and considering becoming a franchisor? Before you rush into planning, you should have checked the feasibility well.

The franchising of his company can be easily checked on the basis of these factors: On the one hand, the business model must not be too complicated. Franchisees who work several hundred kilometers from the franchisor’s headquarters must be able to understand the business concept in no time – and be able to transfer it to their region.

As with any other company, the following also applies: only those who have a business idea with a unique selling proposition can stand out from the competition and find demand among the population.

If you want to become a franchisor, you mostly want to operate franchising throughout India. Therefore, the entrepreneur must be sure that he will find franchisees across the country who find his concept convincing.

In addition, the future franchise company must be aware that the system needs a broad financing base.

The demands on personal skills are also more challenging than in a branch or sole proprietorship. A mature entrepreneur is required in franchising, someone who motivates his franchisees in a relationship based on partnership.

It may take some getting used to for one or the other franchisor that sometimes a franchisee develops his business better than the idea’s originator. Franchise also means that everything is not ordered from above, but that everyone sees themselves as partners and is ready to learn from one another.

Advantages and disadvantages of the franchisor

Franchising offers companies the opportunity to quickly develop large markets through new franchisees. The franchisor does not have to assume full responsibility for the company of his franchise partner.

On the other hand, the franchisor is giving sales opportunities to franchisees that may outperform those at headquarters. On the other hand, the entire franchise system’s reputation can only be badly damaged by a few black sheep. 

Or do you want to become a franchisee?

Once the decision to become a franchisee has been made, it is a matter of finding the right franchise for you. You can choose from around 1,000 companies; the first criterion should be the business idea or the product/service that you want to sell. Only those who identify with the respective system can later have success and fun.