Partnership Between the Franchisor and Franchisee

Trying to get the hang of a franchise Philippines business? Not to worry. In this article, we will help you understand the role of each side in this industry, the franchisor and the franchisee.

Franchisor cannot run his business without his franchisee. For the franchisor, the franchise is an alternative to building ‘chain stores’ to distribute goods and avoid investment and liability over a chain Just like any other relationship, one must do its part and responsibilities. Each needs time, effort and care for the sake of the business. The franchisee and the franchisor must work together to make their business successful. “The franchisor’s success is the success of the franchisees”, like most people say. But don’t make an assurance of that. There are still franchises that fail, maybe because of lack of understanding between the franchisor and the franchisee or maybe they don’t have the formula in business, which is somehow helpful to businessmen.

However, running a franchise appears less complicated than having your own business. Aside from less risky, your franchisor will help you with manage your business and gives you more ideas on how to make it successful. The relationship between the franchisor and the franchisee must be mutual. Like in marriage, they must benefit each others. One’s idea must be share and talk about.

Ma. Alegra Sibal-Limjoco, vice-chairman of the Philippine Franchise Association (PFA) said , “a franchisor must guide, mentor, ad take care of his franchisee especially during the early years.” On the other hand, the franchisee must do his part. Limjoco added, “He (franchisee) cannot just implement his own plans; he needs to follow the rules laid down by his franchisor,” If one fail to do his part, then the relationship or even the business will be affected. To strengthen this relationship, here are some tips that you may keep in mind.

  1. Do your part. Not because your franchisor is there to help and support you, you will no longer do your part. Like I’ve said, franchising is built on mutual benefits. The franchise setup “may be distinct from other means of expanding a business, but the expectation of a good financial return will always be at the root of it”, Armando O. Bartolome, president of GMB franchise Developers, explained. The franchisee needs to do his homework such as doing his reports, navigating entire websites and reviewing documents. In other words, being hands-on franchisee is needed. The franchisor, on the other hand, do the same thing. Monitor the progress of their business, reports and document each transactions.
  2. Each others commitment. One thing that bind the franchisor and the franchisee, it’s the contract. Aside from it binds the franchisor and franchisee, it also details requirements that each side must fulfill. This contract must be follow, or else, one who violated it may be punish, in a legal way.

Because their main goal is to make a good status as the business is running, they should be able to speak their minds, especially about sensitive issues or areas of conflict. Anyhow, in a relationship requires both parties to encourage and inspire each other, for the benefit of their business.

  1. Consistency for the customers. Like any other business, “customer is always right.” Costumers feel loyal to business that offer them a feeling of familiarity and comfort. Do not fail your customers expectation on your product/service. For most consumers, a brand is not just about the label or trademark, it’s about an entire experience. The franchisee still has a huge control over his franchise business. Franchisor have the right to insist on preserving their basic system. The franchisor is the root of franchisee’s success. Just do each others part.

Like any other relationship, there are times that conflicts may occur. And if you already experiencing such problems, try to make a decision and talk to your franchisor. And so, before you sign a franchise agreement, you must think of an exit strategy. But you need to consider the contract. You must not violate your agreement with your franchisor. Try to think a better way how to walk away with the contract. There are two factors you need to consider: your financial capability and your emotional readiness. With your financial capability, you must ask your self if you have enough funds to start a new business? Is it enough to surrender your present business to another? Well, if yes, then time to throw the towel and get up a new one. And as with the emotional readiness, some people find it difficult to start a new business. Try to ask your self first, “are you ready to let it go?” If yes, then go with it.

You still have the full control over your franchise. Your franchisor can be your backbone but you still need to do your job as a franchisee and as a partner to them. Of course, be aware that at this point, you must be sure that you’re dealing with the right kind of people and avoid franchise scams.

  • Armi delos Santos

    I am also a franchisee for 6 years..Recently, i encountered a problem from my franchisor when during the time of my existing contract, the place of our food business was demolished & i cannot find another location during the time our initial franchise contract expires but given the situation, he let me pay a franchise renewal fee for another 3-year term.The problem is,they accepted another franchise payment on the same location of mine wherein they received 7x bigger amount compared to what they received from my renewal fee.I was not issued an official receipt of my payment 5 months ago together with new franchise contract and last month my franchisor accepted franchise fee from a new franchisee. They did not inform me about it..I find a new place already for turn-over next month  but my franchisor favored the new franchisee to operate the business on the said  location where i have existing franchise.This is not a fair business practice..Is there any institution/association to help me talk with my franchisor with regards to my problem stated above?