What is a Management Franchise?

Franchising is a business model where franchisees operate their own businesses based on the franchisor’s established system. However, there are various types of franchising, and each offers different opportunities for prospective franchisees. One of these types is a management franchise. A management franchise is ideal for individuals who want to adopt a role that primarily oversees their business and manages their team. This article will discuss management franchises and the skills you will likely need to run such a business. 

What Are the Different Types of Franchising? 

The following table describes some of the different types of franchising, including management franchises. 

What is a Management Franchise? 

The typical franchise model involves a franchisee running a business that uses the franchisor’s: 

• business model; 
• intellectual property; and 
• operating systems. 

Franchisees are often deeply involved in the daily operations of their companies. However, within a management format franchise, franchisees adopt a managerial role. Management-focused franchisees lead their companies by overseeing operations, concentrating on broader business development, and managing employees.

Should I Opt for the Management Format as a Franchisee? 

Whether you decide to join a management franchise can depend on many factors, including the following:

1. Your Role as a Franchisee

The role you adopt as a franchisee can vary significantly across each different type of franchising. As a franchisee of a management franchise, you would be a leader, concentrating on the business strategy and broader planning. 

It is unlikely you would be involved in customer-facing work. However, the roles of management-focused franchisees can vary depending on the type and size of your business. Some franchisees will take a more passive role, whereas others will actively participate in tasks such as organising their teams. Some management franchisees may concentrate on leadership and business development and still spend a small portion of their time on daily operations. 

2. Prospective Business Venture

To decide what type of franchise you would like to run, consider what you want from your prospective business venture and ensure that an opportunity aligns with your goals before you accept it. When you find a potential opportunity, consider whether you have the necessary skill set to fulfil the role.

3. Training

A franchisor will provide initial training and support to help you carry out your role. However, it is vital to keep in mind that in management franchising, your primary responsibility will be to manage your business. Therefore, you should have the appropriate transferable skills to take on this responsibility, including effective leadership skills. 

A franchisor will seek to protect their business interests by ensuring you are a suitable candidate. However, many franchisees embark on a new career through a franchise opportunity. Therefore, even if the opportunity is in an area you have little to no prior experience, you may have valuable transferable skills. 

Franchise Opportunity Due Diligence

In addition to assessing your existing skill set, you are responsible for conducting due diligence on a franchise opportunity before signing a franchise agreement. Conducting due diligence can include:

• understanding the franchise agreement and any additional documents the franchisor has given to you;
• thoroughly researching the franchised business and the franchisor; and
• speaking to existing franchisees within the network. 

There is no guarantee that a franchise opportunity will develop into a successful business. Therefore, you should seek professional advice before entering a franchise agreement. A lawyer can conduct due diligence and advise you on the potential viability of an opportunity. Seeking advice is especially important as franchise opportunities often entail significant investment. 

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Key Takeaways

A management franchise is similar to a business format franchise. Both approaches involve a franchisor providing a franchisee with a complete package to operate a business unit and training them to fulfil their role. However, management franchises typically involve a franchisee: 

• taking a more managerial role; 
• concentrating on business development; and
• undertaking strategic planning and team leadership rather than the business’s daily operations. 

Some management-focused franchisees may still dedicate a small portion of their time to day-to-day operations, whereas others may adopt a much more passive role. The role you take can vary depending on the franchise opportunity, the size of the franchise network, and the type of business you run. 

If you are a prospective franchisee who needs help assessing a franchise opportunity, 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.