FREE online courses on Franchising Business and You - Franchising Distinguished - Franchisor and Franchisee Motives-Needs and Expectations

 

Companies choose to become franchisors for a variety of reasons.  The reasons which motivate them often have a significant effect upon the company's expectations for their franchising programs, and the types of services or products they will make available to their franchisees.

 

Franchisees also acquire franchises for different reasons, and the franchises they acquire are often of different types.  For example, an owner of a hotel property may be eager to increase its occupancy and revenues and/or its resale value and may be driven to affiliate with a franchise organization to satisfy those purposes.  The prospective franchisee in such case may often carefully analyze different competitive franchise brands before making a decision.  Nonetheless, the decision of that prospective franchisee will be to acquire a hotel franchise, not any other type.  On the other hand, an investor in a muffler shop franchise may be someone who initially is not sure what type of business he wishes to enter.  He or she may have been prepared to invest virtually everything he or she owns and commit to working seven days a week, 15 hours a day for several years to make successful whatever franchise he or she ultimately selects.

 

The relationship of the hotel franchisee and the muffler shop franchisee with their franchisors are likely to differ significantly.  Although both hope to profit from their relationship, the types of benefits derived from the franchise relationship and the relative dependence of the franchisees upon the franchisors may vary considerably.

 

Investors in a hotel property may hire managers or a management company to operate their business.  They and their lenders are likely to be represented by legal counsel when entering into the transaction.  The muffler shop franchise owner may have more limited resources, and may view this as the first and best opportunity he or she has ever had to own a business.

 

The person who acquires a franchise territory in which to sell services or products from a van who invests under $30,000, much of it borrowed, usually has different needs from a multiple unit restaurant franchise owner who has committed through an area development agreement to open and operate five restaurants, each requiring an investment of more than $1 million.

 

Persons acquiring real estate brokerage franchises have different needs and expectations from the owners of tax preparation franchises.  Both offer professional services, but the tax preparation franchise has a very limited business season.  Similarly, owners of retail franchises which operate from regional shopping malls typically will have to deal with sophisticated mall landlords and perennial seasonal changes in the products that they offer.  On the other hand, owners of hair salon franchises may lease facilities in strip malls, but may be passive investors and reasonably unconcerned about seasonal styles.  Their major concerns may deal more with recruiting stylists than with evaluating which styles to feature during any given season.