What Makes a Good Franchisor?

Franchising can be an excellent method of business expansion. In the UK, there are no specific laws regulating the franchising industry. Unfortunately, some franchisors take advantage of this lack and fail to follow good practices, which can be particularly difficult for their franchisees. ​​This article will explain the qualities of a good franchisor and some best practices in the franchise business.

Transparency From the Outset

The quality of the relationships you share with your franchisees leads to forming a strong franchise network. Your franchisees are on the ground, operating your brand. Trust is a vital pillar of a good franchisor-franchisee relationship. To facilitate trust, you must be honest with your franchisees. For example, you can:

• be transparent about fees; 
• keep them up-to-date about developments within the business; and
• be honest and manage their expectations when presenting financial forecasts. 

The Franchise Disclosure Document 

Franchisors should practice honesty from the very early stages of the franchise relationship. In some countries, franchisors must provide prospective franchisees with a franchise disclosure document (FDD). This document details specific information about the franchise’s: 

• background;
• history; 
• financials; and 
• key personnel. 

UK law does not require franchisors to provide an FDD. Nonetheless, you can provide potential franchisees with this key document during the onboarding process alongside the franchise agreement. A prospective franchisee with a complete picture of the franchise can make an informed decision. Facilitating informed decision-making can build trust from the beginning of your relationship.

Good Communication 

Good management follows good communication. Franchisees should be able to give you feedback and contact you if needed. Maintain two-way channels where you can share information with the franchisee, and they can ask for your support. You can also seek their feedback. They will likely have valuable insights to share that can shape your approach to your overall network. 

Methods of communication can include:

• face-to-face check-ins; 
• e-mails; and
• training and support mechanisms. 

Face-to-face meetings can be a great way to share information with your franchisee and open a dialogue. You can better gauge the franchisee’s emotions when speaking to them in person. There is, however, a careful balance between supportive management and being an overbearing franchisor, so bear this in mind. 

Franchise Associations

In the UK, several professional bodies, known as franchise associations, regulate the franchising industry. This includes the British Franchise Association (BFA). The associations set industry standards that they require members to meet. Membership is voluntary for franchisees and franchisors, but it is best practice to join.

The franchise associations provide: 

• education;
• support;
• networking opportunities; and 
• dispute resolution. 

The BFA also offers accreditation, a badge of quality within the industry. Additionally, the BFA thoroughly vets the businesses of franchisors who seek to join. They look closely at particular aspects of each franchise, such as its standards and ethics. 

UK Franchisor Handbook

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Training and Support

Support is another essential pillar of the franchisor-franchisee relationship. Franchisors need to provide an initial training program to their franchisees. During the initial training, you can cover a comprehensive picture of the business, ensuring that new franchisees are familiar with the overall franchise and capable of operating their business. It is best practice to ensure that the training program is of good quality and effectively equips franchisees for their roles. 

Beyond the initial training, you should provide ongoing support to franchisees. You can facilitate ongoing support by maintaining open communication channels, conducting performance reviews, and providing further training. Active support could be necessary if you encounter the following:

• the introduction of significant franchise developments; 
• the introduction of new marketing campaigns; and
• when a franchisee feels they need it. 

Legal Compliance 

A lack of specific franchising laws does not mean franchising is a free-for-all. Legal compliance is essential for both your business and your relationships with franchisees. Some areas of law that are likely to impact your franchising activities include:

• contract law;
• intellectual property;
• data protection; 
• employment law; 
• competition law; and
• consumer rights. 

Be aware that you may need to follow additional regulations depending on the type of business you run and the industry it operates in. If you need legal advice, you should consult an experienced franchising lawyer. They can help you navigate the complexities of franchising and business operations. 

Key Takeaways

Trust, communication, and support form the foundation of a solid franchisor-franchisee relationship. These relationships contribute to the overall success of your brand. This article has discussed the benefits of:

• being a transparent franchisor through honest communication;
• providing detailed information about the franchise to prospective franchisees through a franchise disclosure document; 
• joining a franchise association; 
• facilitating a comprehensive programme of training and ongoing support provisions for franchisees; and
• ensuring legal compliance. 

If you require legal assistance with your franchise, our experienced franchise lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.