Tales of the expected

In determining the obligations of a franchisor, much depends on the nature of the business. The sorts of obligations which a franchisee should rightly expect from a franchisor of a fried chicken business are going to vary considerably from those expected of a franchisor of a retail confectionery or dry cleaning business. Nevertheless, almost all professional advisors and ethical franchisors would agree that there are certain franchisor obligations which are fundamental to ethical franchising, irrespective of the nature of the business.

Training

It is a sine qua non of franchising that franchisors train franchisees in how to operate the franchised business, and this obligation to train must continue beyond initial training so that franchisors are obliged to provide continuing and further training to franchisees during the subsistence of the franchise agreement.

Protection and reputation

Franchisees pay franchisors for the right to use the franchisor's intellectual property, such as the trade name, trademarks, know-how, copyright, business system etc. Franchisors should do whatever they can to protect their intellectual property and should be under an obligation to continue protecting their intellectual property including, where necessary and sensible, taking court proceedings against infringers. A balance has to be struck between what is necessary, desirable or practicable in the interests of the franchisor, the franchisee and the franchised network as a whole. Nevertheless, franchise agreements should contain provisions relating to this, so that prospective franchisees can make a decision as to whether such provisions are acceptable to them or not, on an informed basis.

Support

Crucial to any successful franchised operation is the level of support a franchisor gives to its franchisees. This, after all, is one of the things franchisees pay for.  There should, therefore, be a positive obligation on the franchisor to provide such support, since a franchisee may reasonably require to enable the franchisee to run his or her franchised business in accordance with the franchisor's system. The level of support required will vary from one franchisee to another. Franchisors are aware of the fact that a line needs to be drawn between supporting franchisees in genuine need of support and those who are so demanding of their franchisor's support that they substitute their own efforts so that eventually, if not quickly, they become dependent upon their franchisor's support for the success of their businesses.

Improvements

The obligation to enhance, develop and improve the system, the services, the product range etc of a franchised business lies squarely with the franchisor. This obligation is fundamental and is one which cannot be delegated to franchisees. One of the principal obligations of franchisees is to sell the goods and or services which are the subject of the franchise, not to develop them. Of course, franchisees should be involved in assisting franchisors to a reasonable extent in pilot/market testing any improvements. Mature franchisors also encourage franchisees to use their initiative to think of improvements and innovations and to relate any ideas they may have as to how the business or the system may be improved, to the franchisor; but it is the franchisor who must decide whether an idea is worth taking up, developing and subsequently when ready, passing it to the rest of the franchised network to incorporate into the franchised system.

Quality control

Different franchisors have different methods of ensuring that quality is maintained throughout their franchised network, but before franchisors can do this they must be sure of the quality of their own system, products etc. This is best done by the franchisor having conducted a successful pilot operation. Having established the requisite quality and standards, the franchisor must provide sufficient mechanisms in the franchise agreement to enable it to ensure that franchisees operate to the same standards. 

Advertising, marketing and promotions

This is one obligation about which not everybody will agree. Some feel that the obligation to provide, conduct, co-ordinate etc advertising, marketing and promotions of the franchise, at least at the national level, should be that of the franchisor. Much depends upon the nature of the business. In some cases, franchisors are content to leave it to franchisees and feel that their franchised business is such that it would benefit little by any form of national advertising. Other businesses are increasingly becoming reliant upon national or regional advertising marketing and promotions as a necessary feature to ensure success of a franchised business.  Even in businesses which do not need any form of direct advertising marketing or promotions, many franchisors still undertake an obligation to provide franchisees with artwork, flyers, leaflets, point of sale material, web site etc. thereby ensuring quality, standardisation and economies of scale for its franchisees.

I can think of many more obligations which could be added to the above list, particularly if standards for businesses such as quick printing, fast food and parcel delivery are taken into account.

Nevertheless, the above will, I hope, at least help prospective franchisees and those advising them, to get some sort of "feel" for what they should be looking for.