In this edition of Ask the Expert, Armando Bartolome enumerates the tricky issues that may cause conflict between a franchisor and franchisee and explains each of these six issues. Find out what they are here.
Q: What are the usual issues that arise between a franchisor and a franchisee?
1. Pricing of products /services
There are products which are proprietary and may only be purchased from the franchisor or authorized supplier. The franchisor normally makes a decent mark-up to answer for the cost of production.
2. Service Fee
This is a percentage or a fixed rate based on the gross collected by the franchisor on either a monthly or bi monthly basis. This fee answers for the continuous support by the franchisor.
This is a defined territory set by the franchisor for each franchisee. Prior to signing the franchise agreement, both parties are made aware of the boundaries for each branch.
4. Additional branches
Responsible franchisors will always make sure for franchisees applying for additional branches of its management ability and capability. This most based on the performance evaluation conducted by the franchisor.
5. Advertising and Promotions
To maintain awareness of the brand, franchisors will always have various types of marketing campaign. This may be classified either on the national level or within the locality of each franchisee.
6.Compliance to standards
Franchisors always enforce strict adherence of all branches (both company and franchise operated) on the set standards. This covers the entire facet of the branch specially on the consistency of product / service as well as customer service.
Armando "Butz" O. Bartolome is currently President of GMB Franchise Developers, the pioneer franchise development company in the country and is behind the growth and expansion of over 200 local companies. You may reach him at firstname.lastname@example.org.