In franchises that offer digital services, the franchisor often plays an active role in providing the final product or service to the customer. If you are thinking of becoming a franchisee in a digital service franchise, you will still have an essential role to play. However, there may be some additional considerations to make in this situation. For example, you should consider what might happen if something goes wrong with a customer. If the franchisor provides the end product, who is to blame? This article will explore some key questions to consider before entering into an agreement with a digital service franchisor.
Why Might a Franchisor Want to Manage Their Digital Services Directly?
It is not unusual for a franchisor to want to play an active role in their business. This is more likely to be the case where the franchise provides a digital service.
If the franchisor is a specialist service provider, they may need franchisees to:
- grow their digital footprint;
- provide existing customers with enough attention and support;
- bring in new business from other locations.
What Will My Role Entail as a Digital Service Franchisee?
As a digital services franchisee, your role is likely to mostly involve finding new customers and marketing. Your duties may include:
- sourcing prospective customers and identifying sales opportunities;
- conducting local area advertising;
- meeting face-to-face with clients and businesses to develop relationships; and
- acting as a representative of the business on a local scale.
In some cases, you may be responsible for the entire sale process. This could mean:
- introducing and presenting the franchisor services to customers;
- creating tailored packages; and
- handling billing and invoicing.
If you collect or store payment information for customers, you may have additional requirements to comply with. You should consider these requirements carefully before deciding to do this.
You may need to provide ongoing customer support or take on other responsibilities, such as:
- collecting and providing further information about products;
- handling complaints and refunds; or
- dealing with difficult customers or requests.
Make sure you have a clear understanding of your operations manual, as this should explain what your responsibilities will be as a franchisee.
What Should I Consider Before Becoming a Digital Service Franchisee?
Before entering into a digital service franchise, there are some key questions to consider. For example, you should think about:
- whether your customers will be aware that the franchisor is providing the actual service;
- who will invoice the customer;
- whether you will receive payment from the franchisor or the customer;
- whether the franchisor has given you clear instructions and a process to follow;
- how much independence and control you will have over how and when you work;
- when the franchisor will be able to contact you;
- when you will be able to contact the franchisor;
- the effect of any issues with the franchisor’s service on your profits or fees;
- any specific targets or results you will need to achieve;
- any upfront and ongoing costs; and
- whether there will be repercussions for not strictly following instructions.
Service providers must meet certain guarantees under Australian consumer law. This means that it is extremely important that you find out the answers to these questions to avoid being held responsible for more than you realise and facing heavy penalties as a result.
What if My Franchisor Is Not Based in Australia?
An international franchisor will still need to meet their obligations under the Australian Franchising Code of Conduct. This means that your franchise documents will still need to comply with Australian law.
However, there are some additional commercial considerations to think about if your franchisor is based overseas. For example, you should find out whether:
- the franchise is a well-known brand internationally;
- the franchisor has experience operating overseas;
- you will ever need to physically travel to the franchisor, if so, who bears the costs;
- the franchise will provide training and, if so, how they will deliver it;
- you will be able to contact the franchisor during business hours if they are in a different timezone;
- the support materials the franchisor provides are written in another language or the franchisor does not speak English;
- you need to seek tax advice relating to your fees or royalties; and
- there is a process in place to resolve disputes with the franchisor.
Asking these questions can help you to determine whether the business is a good fit.
Before entering into a digital service franchise agreement, you should have a clear understanding of:
- what you are responsible for; and
- what support you can expect to receive.
Even though you may not provide the actual service, you may still have important legal obligations to your customers. Of course, you will also have rights and protections as a franchisee. If you have any questions about entering into a digital services franchise, contact LegalVision’s franchise lawyers on 1300 544 755 or fill out the form on this page.
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