The Franchisor-Franchisee Business Relationship

The difference between the franchisor and the franchisee is often confused. They are not the same thing, and though they work closely to ensure the success of a franchise, their role is very different. Without a franchisor, there can be no franchisees. And without franchisees, there can be no franchise.

The franchisee is the person or people who invest in the franchise and make it a business of their own. The franchisor was the original business owner or idea generator who oversees the process and the ongoing business.

The business relationship between these two entities is essential to the success of a franchise.

business relationship

Some people think of the franchisor as a parent and the franchisee as the child, but this is not true at all. These two entities are partners both focused on a single business goal. Their relationship is governed by a contract that permits a franchisee to use a trademark and licensing system within a standard set of guidelines for their own personal benefit and for the benefit of the franchise.

A Franchisee is an Independent Business

Franchisors can and should act as a teacher to ensure consistency across the franchise brand. However, teaching franchisees should be done with respect and an understanding they have invested in the franchise. This is a mutually beneficial relationship, not one in which someone has power over another.

A franchisee is an independent business person given a great deal of control over their business. It is the franchisor’s responsibility to give a franchisee all the tools available to succeed, but it is not the franchisor’s job to save a failing franchise. He or she must always act in the best interest of the franchise, even if that means failure for a franchisee.

The franchisor-franchisee business relationship should be clearly explained right from the beginning. This is one the keys to franchising success. To learn more or to determine if your business would be right for a franchise model, give us a call.