Franchising can be an excellent way for entrepreneurs to start their own business while enjoying the benefits of an established brand. However, as with any business venture, there are pros and cons to consider before making a decision. In a recent video conversation with Jeff Bannon, Succession Planner with The Rawls Group, and Aicha Bascaro, President of the American Franchising Academy, the differences between what franchisees get and don’t get from their franchisor were explored, highlighting some important considerations for anyone considering this type of business model.

One of the primary benefits of franchising is that franchisees acquire a proven brand, including product service processes, procedures, image, regional and national marketing, and brand recognition. This is an advantage that would take years for an entrepreneur to build on their own. By becoming a part of an established franchise, the business owner can leverage the existing reputation and recognition of the brand, which can help to attract customers and build a customer base more quickly.

However, the video also pointed out that there are some things that franchisees don’t receive from their franchisor. One of the key areas where franchisees may be lacking is in business acumen and people management skills. While the franchisor provides the franchisee with a proven business model, they don’t necessarily provide the knowledge or skills required to effectively manage a team and grow a business.

Franchisees need to take on the responsibility of developing these skills and processes themselves in a way that is sustainable for growth. This requires a commitment to ongoing learning and professional development, as well as a willingness to invest time and resources into training employees and building effective management processes.

One of the challenges that franchisees face in this area is joint employer liability. This is a legal obstacle that prevents franchisors from providing knowledge on the employee side of the business. Essentially, the franchisor cannot be seen as the employer of the franchisee’s employees, which limits the type of support and guidance that can be offered in this area. As a result, franchisees need to be aware of this and develop strong processes to grow their business, including employee training, retention, promotion, and compensation.

In conclusion, franchising can be a great way to start a business, but it’s important to understand the limitations and challenges that come with this model. Franchisees need to be willing to take on the responsibility of developing their own skills and processes, including business acumen and people management, while also being aware of the legal obstacles that may limit the support they receive from their franchisor. By taking a proactive approach to learning and growth, franchisees can build a successful and sustainable business that leverages the benefits of an established brand while also addressing the unique challenges of this model.

For more insight:

Visit the “Franchisee Succession: How to Grow & Build Value” discussion page or select one of the additional episodes of the series below:

Resources

  • American Franchise Academy: assistance for franchise leaders in building a successful growing enterprise so that they can achieve their business & financial goals.
  • Succession Readiness Survey:  A 7-minute investment in time will put you in an informed position of opportunities many business owners overlook, impacting business value, growth, and lifestyle, and ultimately achieving your vision.
  • Contact a Succession Planner: The Rawls Group can help you with insights and other resources and see if it makes sense to work together. At the very least, in 30 minutes, you may get some ideas you can apply to your business immediately.

Business Structuring


Business structures and agreements have a direct impact on areas such as, but not limited to, taxation, ownership control, shareholder access to cash flow, and family governance.  Agreements preclude disagreements. Click the following links for more drill-down resources on Business Structuring.

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We can provide insights and other resources and assess whether it makes sense to work together. In just 30 minutes, you may gain actionable ideas that you can immediately apply to your business. Contact us via phone or email below, or fill out the “Ask An Expert” form.