Franchising Success: Strategies, Relationships, and Responsibilities

This essay explores key strategies for building a successful franchise system, emphasizing the importance of an upside-down pyramid organizational structure, the three-decision lens (political, legal, and practical), franchisee education, and crystallized planning. It delves into the unique relationship between franchisor and franchisee, highlighting negotiation, innovation, and emotional turbulence, while also addressing social responsibilities, including economic, legal, ethical, and philanthropic obligations. The essay further discusses dispute resolution strategies and the future of franchising, providing a comprehensive overview of the critical elements for franchise success. Desklib provides this document and other resources for students.

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Table of Contents
Strategies for Successful Franchising System......................................................................1
The Upside down Pyramid:..............................................................................................1
The Three Decision Lens:................................................................................................1
Educate Franchisee:..........................................................................................................1
Develop a crystallized plan and vision:............................................................................1
Franchise Relationship.........................................................................................................1
Negotiation:......................................................................................................................2
Innovation:........................................................................................................................2
Emotional Turbulence:.....................................................................................................3
Social Responsibilities.........................................................................................................3
Economic Responsibility:.................................................................................................3
Legal Responsibility:........................................................................................................3
Ethical Responsibility:......................................................................................................3
Philanthropic responsibility:.............................................................................................4
Obligations...........................................................................................................................4
Financial:..........................................................................................................................4
Marketing:........................................................................................................................4
Administrative:.................................................................................................................4
Territory Development:....................................................................................................5
Dispute Resolution Strategies:.........................................................................................5
Future of Franchise:.............................................................................................................5
Bibliography.........................................................................................................................6
Strategies for Successful Franchising System

The Upside down Pyramid:
This is one of the most important strategy for building successful franchise business. In
this, we will do a paradigm shift of organizational structure. As most of the firms have
centralized system which they are operating in their business. The managers gives
instructions to their employees and it eventually trickles down to customers. As franchising is
different from a traditional corporation and it is a unique business model. By using this
strategy, we can flips the structure of the business by placing leader at the bottom as mostly
franchise owners are the independent business operators. By implementing this strategy we
upside down the organization structure which leads to successful business franchise. (Marco,
2017)
The Three Decision Lens:
According to this strategy whenever a decision is made we have to consider three factors
i.e., Political, Legal, and Practical. Making a fine decision is the main mission of every
successful franchise. By considering these three factors we can we can minimize the risk of
franchising which will eventually leads to building a successful franchise for our business. In
this we see the legal laws and political stability of a country. If a country is not political
stable than it is very risky for a business to open its franchise there. Sometimes the legal laws
of that country also restrict the business to open its franchise. It is important for every
manager to consider three decision lens for building a successful franchise. (Grosman, 2017)
Educate Franchisee:
This is also the most important part of a franchisor when he wants to expand his business.
Franchisor educates franchisee about the guidelines of the brand and the need for them. It
includes all possible potential harm when a franchisee not follow the guidelines. (Grossman,
2017)
Develop a crystallized plan and vision:
Planning and vision plays vital role in making franchising system successful. Most of the
company is not doing well because of lack of planning. It is very important for our business
to make a clear vision and plan so they know what they will do in future. Most of the
companies moves to wrong direction just because of their unclear vision and plan. This stage

includes effective planning and vision before running any business franchise. (Grossman,
2017)
Franchise Relationship
It is a different and unique business arrangement. It is quite different from the traditional
model because of large number of owners are involved in the network. The relationship is
drastic alteration that is exist between franchisor and franchisee. If we talk about the failure
of the franchisee it will because of two reasons. The first includes the macro environment and
second is because of poor franchisor who doesn’t have adequate structure. We can also relate
the relation of franchisor and franchisee like a marriage. Their relation start with a court and
become more solid as time passes. Both parties confidence will increase as time passes. And
it will keep on strengthen until the divorce separates them. In this one part is strong no matter
how much longer the relationship exist between them. Their relationship is for a fixed period
of time and will be renewable after that time. (Nethan, 2017)
Negotiation:
It is a relationship between franchisor and franchisee. This involve regulations and merits
to define and to protect the service quality or product that are being provided or sold to the
consumers by the franchisee. The business which is conducted by the franchisee is the
business which franchisee licensed
To carry out which is according to the terms written into the contract. The contract life is
written into the contract which maybe of one year, or as long as you desire. Mostly the
contract life is between three to five years. (Elgin, 2002)
Rules are very important in franchising it starts from original contract to renewals. The
agreement between franchisor and franchisee include all rules that are specified into that
particular agreement. In franchising business a person is in front seat of the competition if he
follow all the rules that are written under the contract. So it is important for everyone to know
and accept the rules. The potential franchisee may fear the system that franchisor has
established which includes conform to an intimidating corporate system and overpowering.
This kind of fear is exist in all business organization and social life. It is impossible to protect
the validate value of trademark, rich history of services or product and the brand without

franchising. This will result in reducing the quality of the brand and its consistency. But with
the help of agreement franchisor insure its quality and consistency risk.
Sometimes franchisee opinion, suggestion and proposition that he strongly feels can alter
its agreement. But in many cases franchisor will not listen to their franchisee opinion.
(Webber, 2013)
Franchisee will accepts all the benefits that franchisor given to him, in return of the
quality and standards that franchisee is providing to the customers. It adverse effect will not
only harm franchisee profits but can also result in bad repute of the franchise chain. That’s is
why franchisor will impose some regulations and standards to minimize their risk. This will
result is maximize profit and maintain the good reputation of the franchise. (Wilkerson, 2017)
The liquidate damage provision will be very steep if franchisor terminate its contract with
the franchisee. It can cause a serious damage to both of the parties. If the dispute is arises
from franchisee end than that dispute is generally resolve by the parties in the location under
the State Law as said by the franchisor. (Sheehan, 2012)
Innovation:
If the franchisor set some standards on the franchisee it will intended to stifle innovation
and entrepreneurship at that level. As, most of the innovative marketing strategy at franchise
level is because of ideas that are generated within each system by one or more franchisee. If
we encourage innovation it will help in developing our business. In this, we will encourage
our franchisee to make significant policies that contribute towards the development of the
franchise chain business. (Myers, 2013)
This innovation enables franchisee to implement the policies according to its location.
And this will also result in increasing the profitability of a business. As franchisor system is
controlled by the main party that is franchisor. But if franchisor gives right to franchisee to
put their innovative policies and strategies in their business than it will make franchisee feel
recognized and respected within that organization.
In the start of negotiation, franchisor not allow franchisee to go for innovation but later it
will happen when he will be confident. The element of respect is very important in this if
both parties respect each other. Otherwise the relationship is doomed. And it is good for them

to terminate that agreement just like a marriage we discussed above. Uniformity and
innovation are the whole basis of franchising. In this franchisee is able to run the brand as
written in the agreement by the franchisor. (Jackson, 2011)
Emotional Turbulence:
It is also an important part in franchise relationship. Franchisees face gamut of emotions
in the stage of their development as a franchises. In this stage our franchisee is facing
different kind of emotions initially. It is very difficult for us in the start to fulfill the every
developing needs of franchisors but later this emotional turbulence was handled by us very
efficiently and effectively.
The success of the franchisee will depends on emotional turbulence if the franchisee is
efficiently managing its emotional turmoil that they are facing. Which eventually, result in
speed up of that franchisee progress. The franchisee emotional wheel includes elation,
financial blues, blame, prisoners, clarity and team work.
Commercial marriage is a widely term used for the relationship between franchisor and
franchisee. The franchisor act as a senior partner. The senior partner give some guidelines
which a franchisee will follow to run its franchise chain. (Ruffin, 2017)
Social Responsibilities
It is the responsibility of every member working in our business to act and do his work in
a way which will benefits the entirety. It is an ethical framework which is done by the
employees of our organizational for the betterment of the society. It is the social
responsibility of our business to work in a way which not only benefits its shareholders but
also its whole stakeholder which include employees, customers, public, suppliers and
everyone who is connected with our business.
Economic Responsibility:
Our first social responsibility is to find ways to maximize our profit every year. This is
not only benefits our shareholders but can also contribute towards the economy of Australia.
Therefore our franchise plays very important role towards the economy of a country. For
economic development it plays an integral part. Moreover, it will also leads to nation

building. Our Franchises is working very hard for the betterment of the economy. It is our
first and foremost social responsibility to develop country’s economy. With the help of our
profit we will able to make payment and provide better services to our stakeholders which
eventually leads to economic development.
Our franchise also provide job opportunities which will result in unemployment of a
country and contributed towards the development of an economy. By doing FDI into other
country’s we can not only contribute towards their economy but also provide revenue to our
country. Furthermore, but our products and services to others it will increase their Gross
Domestic Product and eventually reducing the imports of that particular product that we are
offering to them. Lastly, we can also pay corporate taxes which boost economy of that
country. These are the ways through which we are contributing towards economic
development. (Akrani, 2013)
Legal Responsibility:
Our second social responsibility is to abide by the rules of laws of that country which are
contributing towards the best interest of people. In order to maintain business integrity and
work towards best of the public business are now regulated by the governments. These laws
include permits of the business and its requirement, tax laws, rights of labors and protections
of customer etc. (Kylan, 2013)
Ethical Responsibility:
Stakeholders of a company is effected by the decisions and actions of the business. It can
affects stake holders in various ways. Wherever, the business operates it is essential for them
to follow its norms, traditions and values. (Jackman, 2013)
This will makes our franchises to make correct decision and also distinguished right from
the wrong one. This can be done by considering others ethical values i.e., their values, norms
and traditions. Our franchise has adopted that code of conduct. This will enabled our staff to
act in an ethical boundary
The two big obligations of the company includes legal and economic responsibility. After
obeying these responsibilities by our company it will automatically covers ethical
responsibility. It is not an obligation onto the company, it was done because franchisor think

it is the best thing to do. Our franchise are completing ethical responsibility by giving fairly
wages to the employees of the company, giving them the benefits they deserve, and giving
them proper medical treatment that they deserve. Moreover, we are giving precautions to the
employees and also gave them proper training which will minimize the risk of safety and
health. Lastly, we are giving our employees all the basic needs which includes food, health,
and education about how to work in that environment and giving proper equipment which
ensures their safety and minimize the risk. (Scilly, 2013)
Our franchise is also gives charity every year which helps the needy people. Moreover,
we made a program in which we are giving rewards to those who are giving maximum
charity for funding needy people. This will motivate them to contribute in our charity
program and can work for the best of the society and fulfill the needs of people. (Rampton,
2016)
Philanthropic responsibility:
The fourth social responsibility that are franchise is doing is seeing itself as an active
member of the society and contributing toward its development. This responsibility implies
that it is essential for that business to give back to the society which eventually result in its
betterment. As we are doing above three social responsibility our firm is automatically doing
philanthropic. There is no need for special philanthropic programs. This gives our franchise
the positive image towards the society. As it is not necessary for us to start philanthropic
programs as our firm is already giving charity and providing fund raising programs. (Pineda,
2015)
Obligations
Franchise agreement includes all legal obligations that they have on each other. For
running a business it is essential for both of the parties to know its obligations to develop a
successful business. It will also result in increase in the profitability of the firm. (George,
2016)
Financial:
As stated in the guidelines franchisee must have to arrange the finance that is needed by
the franchise. The franchisee have to pay all possible costs which include license staff,

facility and marketing etc. It is also one of the most important duty of the franchisee to pay
the royalty fees from its revenue. And for franchisor point of view it is his duty to tell all
possible cost that franchisee needs to arrange. (Root, 2017)
Marketing:
As marketing plays a very important role on sales. Effective marketing will result in
increase the sales of the product and give positive image to the customers. It is the duty of the
franchisor to guide all the effective marketing techniques that they are using and franchisee
responsibility is to execute those techniques and give advice if possible for future marketing
which best suits their location. (Root, 2017)
Administrative:
Every franchisor has its own way of recording and keeping the date and financial
information. So, it is the obligation of the franchisor to give franchisee these assistance. And
from franchisee point of view it is his obligation to keep the data and financials according to
the standard of franchisor business. This will result in developing a better relationship
between franchisor and franchisee and working smoothly. (Root, 2017)
Territory Development:
It is the duty of the franchisor to do research on the location. And also do demographic
research that this location have customer base which helps his franchise to work efficiently.
Franchisee obligation is to make all possible strategies that will maximize the availability of
local customer. (Root, 2017)
Dispute Resolution Strategies:
It is the reality of any relationship that a time will come where franchisor and franchisee
are not onto the same board or not may not agree each other.
First main approach that our firm is used is simply talk to the franchisee. By giving
respect to each other’s points many dispute can be resolved. This involves a one on one
meeting. In this you have to be prepared what you are going to present to him and keep an
open mind and try to understand other view. And also be prepared to listen what franchisee
says. (Stone, 2016)

If this approach doesn’t not work we will take our matter to CFA Ombudsman program.
In this program both franchisor and franchisee contact CFA Ombudsman. They will listen to
both parties view and will facilitate the communication of both franchisor and franchisee.
Than they will look for a solutions on which both sides agreed to each other. All of this is
done informally on the phone. This program acts like a mediation they listen both parties and
resolve the issue their fees are depends on to the complexity of the issue. (Sherry, 2015)
If issue still not resolved arbitration is next approach we take to solve our differences. In
this they will reach to the decision regardless which of us is being effected by that decision.
They listen views of both party and then reach to the conclusion for the best of the franchisor
brand. (Sherry, 2015)
If still we are not agreed with our franchisor and not want to accept the decision of the
arbitrator then we will take our issue to court. (Paul, 2017)
Future of Franchise:
Our franchise system future is based on the information technology. As internet plays
very important role in the integral part of the franchises growth strategies. Our firm is giving
online services which gives us a competitive edge. Information Technology is now clearly
among the franchises because it provide consumers the ease of access. (Bell, 2017)
Information Technology also helps the franchises to expand their business rapidly. As
with the fast moving technology it helps the business to boost their profitability in the market.
However, many owners not know much about franchising which will result in lees growth of
their firms. It will also enables us to save the cost and time. (Whitney, 2017)

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