Who Is A Franchisee?

Franchising is a business model that allows for both sides to win by giving great benefits and opportunities.

The brand owner gets to expand their network and revenue while the person buying the brand gets to work under a system that has already proven successful.

When understanding the franchising business model, you must also understand who is who.

On one side of the agreement, there is the franchisee. This is the person who buys the brand’s name.

Every franchise agreement must have a franchisee, which is why you must understand who a franchisee is.

This article will talk about who a franchisee is and the other important details about a franchisee.

Who Is A Franchisee

Who Is A Franchisee?

A franchisee is essentially an individual, usually a small business owner, who purchases the trademark rights to another third-party retail business called a franchise.

The franchisee has the right to use all the trademarks, brand names, any other associated brands, market knowledge, and much other information.

While using these names and trademarks, the franchisee also must uphold the guidelines and standards of the initial business set by that business.

The franchisee directly purchases the rights to the brand from the franchisor with a certain fee, excluding other related ongoing fees.

Once the purchase goes through, the franchisee goes into a contractual agreement with the owner of the franchise, also known as the franchisor.

This agreement is to uphold the standards and make sure the brand doesn’t get damaged.

The franchisee also has to pay a fee to the franchisor on terms agreed on in the agreement to keep the trademark’s rights.

Read: What Is Franchise Fee & Why Is It Charged?

Also Read: What Is Initial Investment In Franchise?


What Do You Need To Be A Successful Franchisee?

What Do You Need To Be A Successful Franchisee

Being a successful franchisee is not an easy job, and the only thing you need is not money.

You need to have certain skills to make sure that the franchise branch you will be running won’t go bankrupt. You have to be able to run everything smoothly to keep it alive.

  • Being ready to learn new skills

When you are a franchisee, you become the operator of the branch from top to bottom.

This means you will need to be able to do everything to ensure that branch doesn’t fall behind on anything.

Even though the franchisor provides you with the guidelines you need to run the business, they don’t have anything to do with how you run it every day.

  • Ability to follow the standards of the franchise

You are not going to do things on your own as a franchisee because the franchisor has its own guidelines.

These guidelines are there to ensure that each franchise brand follows a certain set of quality and every customer knows what they are getting.

As a franchisee, you have to be able to keep track of these standards and ensure that your brand is obeying those standards.

Franchisee follows the rules regarding everything from which marketing materials to use to the suppliers they are working with, so you can’t fail to meet these standards.

  • Skill set to run a small business

Even though a franchisee is taking on the brand of a probably massive corporation, the franchisee will essentially be running their own small business under the brand’s name.

Instead of the massive internal help or other benefits that come with a corporate job, a franchisee does not have these.

You will have to have a broad understanding of maintaining a business, know how to work with a clear system, handle their staff, and other important small business management skills.


Can Anyone Become A Franchisee?

Can Anyone Become A Franchisee

On paper, there are no rules as to who can become a franchisee or not. It mostly depends on whether someone can afford to buy the rights to the brand or not.

However, real-time uses don’t really work like this because once the person pays the fees, they still have to run the branch.

That’s why, in practice, those who have sufficient funds and the ability to run a business can become successful franchisees.

Mostly, entrepreneurs who have little experience become a franchisee because it is less risky than creating a business from scratch, and they get some support from the original business.

So, if someone thinks of becoming a franchisee, apart from finding the money, they should also consider whether they can run a business.

Getting classes or getting experience somewhere else before becoming a franchisee is generally the best approach.

Read: What Are Royalty Fees In Franchise?


How To Become A Franchisee?

How To Become A Franchisee

Becoming a franchisee might seem like it is as easy as paying the money and buying the brand’s name and trademarks, but that is not the case.

The franchisee has to follow certain rules, have certain capital, and ensure that the store upholds the standards before starting to operate.

Once the franchisee purchases the brand’s name, they also have to pay an ongoing franchise fee to the franchisor stated in the franchise agreement.

Once the purchase of the brand’s name is complete, a franchisee will have some major responsibilities to ensure that the franchisee status can continue:

  • Following the strict compliance system standards and protecting the franchise’s brand,
  • Help the franchisor to build a loyal and strong customer brand by offering the products the customer is expecting from the original business,
  • The property must always have enough staff to help the customers in need, and the staff must be trained perfectly to uphold the brand’s quality standards,
  • Only advertise the brand’s name and product by the franchise’s approved guidelines.

The Verdict

To conclude, a franchisee is a person who buys the rights to a brand’s name, trademarks, business model, and anything related to a brand.

However, they have to act by strict guidelines to ensure that the business provides the quality that the original business provides.

That’s why a franchisee must possess important skills, such as understanding and running a small business.

If a franchisee possesses these skills, they can run the branch and not let it go bankrupt and enjoy the benefit of working with an established system.

Sources

https://www.investopedia.com/terms/f/franchisee.asp

https://www.liveabout.com/franchisee-definition-1350574

https://www.pointfranchise.co.uk/articles/franchisee-definition-3/

https://corporatefinanceinstitute.com/resources/management/franchisee/

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