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Franchisee vs Franchisor

Thinking of transitioning from a tired corporate career into business ownership? Franchising is an attractive option as it offers not only a proven and successful business model to work with but also access to a larger network of established businesses and resources.

When choosing to become a franchisee (the buyer of a franchise), you should understand the complex relationship between a franchisor (the seller of a franchise) and the franchisee. We at the International Franchise Professionals Group (IFPG) have experienced a multitude of questions from our 1,300 franchisors, franchise consultants and vendor members.

Below, we answer some of the most frequently asked questions (FAQs) about franchisor/franchisee relationships to give potential and existing franchisees an insight into the workings of a franchised business.

FAQs about Franchisee vs Franchisor

What is a Franchise?

A franchise is a type of business model where the franchisor, or seller, licenses their brand and business model to franchisees, or buyers, who operate it independently under their own brand. This allows the franchisee to become an instant business owner with the support of the franchisor. In exchange, the franchisee must pay an up-front franchise fee and ongoing royalties to the franchisor.

What is the Role of a Franchisor?

The franchisor is responsible for setting up the franchise system, creating the brand identity, marketing the business, and providing the necessary support and resources for the franchisee to succeed. The Franchisor typically provides the franchisee with an Operations Manual, which outlines how the business should be run, and helps the franchisee obtain the necessary training and resources.

What is the Role of a Franchisee?

The franchisee is the owner of an independent business that operates under the franchisor’s brand. The franchisee is responsible for operating the business according to the franchise system. This includes recruiting and managing employees, as well as adhering to the guidelines in the Operations Manual. The franchisee is also responsible for generating revenues and profits, and for taking on some of the market risks that come with owning a business.

What are the Benefits of a Franchise?

The main advantages of franchising are the established brand, business system, and support network of the franchisor. Additionally, franchisees benefit from access to the franchisor’s resources such as marketing, advertising and training materials.

Franchise businesses typically have a lower failure rate than independent businesses. This is because franchisors are able to apply their knowledge and help to ensure that the franchisee runs the business successfully. Furthermore, as the franchise business grows, the franchisor is usually able to provide more support to the network of franchisees, further increasing their success rate.

How is the Relationship Between a Franchisor and a Franchisee?

The relationship between franchisor and franchisee is built on trust and support. The franchisor must develop and maintain a comprehensive network of support and resources to ensure the success of the franchisees. The franchisee must trust the franchisor’s expertise and adhere to the franchise system. Together, they must collaborate and cooperate in order to achieve the best results.





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