As a franchisee, your level of experience in running a business might be quite developed, but this is not always the case. The majority of new franchisees fail in their first two years. At times this is due to the franchisees being inexperienced and unaware of the factors that need to be considered when running a business or can simply be a result of unforeseeable market conditions.As a franchisee, your main goal in the initial stages of owning the franchised outlet is to survive. The entitlement to use the image(s) and system(s) of a well-established brand is the key factor that ensures the survival of the franchisee in the first few years.

It is important to remember that, although you are running the franchise as if it were your own (and for most intents and purposes, it is), you are still employing the registered trademarks of the franchisor and applying the valuable trade secrets to your business practices. You are in charge of how, where and when this image and branding are used. You are in charge of the selection of potential employees and their training but the franchisor is also required to provide ongoing support and assistance. This ongoing support is part of their responsibility to you, so use it to your advantage! Ask them to give you advice on how to recruit quality staff and on the systems that are currently in place for training these employees.

It is essential that the franchisor be engaged if advice is required but ultimately the management of the franchised outlet is the franchisee’s responsibility. The operations manual of the franchisor should be utilised at every opportunity in order to gain a better understanding of the franchisor’s expectations on running the business. A well-run franchisee (in the eyes of the franchisor) is one that replicates and mirrors other franchised outlets in the network.

These services (training, advertising, advice) are, to an extent, standard in all franchise agreements. Despite this, the degree to which these services are provided by the franchisor will depend on the terms of each franchise agreement. In the franchise agreement it should stipulate how much support the franchisee will receive in terms of marketing and other expenses. If the franchisee wishes to obtain the most favourable franchise agreement possible, the services of a franchise lawyer should be engaged.

From the outset, keep in mind where you stand as a franchisee and understand the responsibilities, obligations and overall scope of your role. Keep in mind that you, as a franchisee might feel like a partner to the franchise (with an interest in the company) but in fact a franchisee possesses no equity in the franchise and is not a partner. Naturally, as a franchisee, you will have some influence in the day-to-day running of the business but your say/views will in fact have little authority.

Conclusion

If you are a franchisee for a larger and well-established company, it is probable that you will have access to a Franchise Advisory Council who can represent your interests.

If you require any legal advice regarding your responsibilities as a franchisee please contact LegalVision on 1300 544 755 and speak with one of our experienced franchise lawyers.

Lachlan McKnight

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