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August 2023

What does franchising mean? – Navigating the franchisee-franchisor relationship

Uncategorized /

Author: Sara Pantaleo

Franchising definition

In the business world, franchising has emerged as a powerful model that allows entrepreneurs to expand their brand and reach while enabling individuals to realise their dreams of owning a business. At its core, franchising represents a unique franchisor and franchisee partnership. In this blog post, we will delve into what franchising means, how it works, and the dynamics of the franchisee-franchisor relationship.

Understanding Franchising

Franchising is a business model replicating a successful business concept by licensing the brand, products, and processes to independent franchise operators.

The franchisee pays a fee to the franchisor for the right to operate a business under its established brand, benefiting from proven systems, support, and marketing strategies.

This arrangement allows the franchisee to tap into an existing customer base while the franchisor benefits from expanding its brand without having to shoulder all the operational responsibilities.

Franchise model

The Franchisee-Franchisor Relationship

The franchisee and the franchisor’s relationship is at the franchising model’s heart. It’s a symbiotic partnership where both parties have distinct roles and responsibilities.

Franchisor Responsibilities

The franchisor provides the franchisee with an established brand, trademarks, and a proven business model. So, they offer training, guidance, and ongoing support to ensure the franchisee’s success. 

In addition, franchisors develop a comprehensive operations manual that outlines all aspects of running the business, from daily operations to customer service standards. 

Franchisors often manage national or regional marketing campaigns, benefiting all franchisees by driving customer awareness and foot traffic.

Franchisee Responsibilities

Franchisees invest in the franchise, paying initial fees and ongoing royalties, also known as management fees. This investment grants them the right to use the franchisor’s brand and systems. 

Franchisees are responsible for day-to-day operations, including hiring and training staff, maintaining quality standards, and providing excellent customer service. 

Franchisees must adhere to the franchisor’s established processes, quality standards, and operational guidelines outlined in the operations manual and franchise agreement. 

Franchisees typically pay ongoing royalties or a percentage of their revenue to the franchisor for continued support and use of the brand.  This will vary as some franchise models make their income from the products or charge a flat regular fee.

Most importantly, they provide local knowledge and engage with the community locally. 

Franchising

Mutual Success and Challenges

For franchising to succeed, both parties must work harmoniously towards common goals. Franchisees benefit from established brand recognition and support, while franchisors benefit from rapid expansion and increased market presence. However, challenges can arise.  Such as:

  • Consistency – Maintaining consistent brand experience across multiple locations can be challenging. Franchisees must adhere to the franchisor’s standards to uphold the brand’s reputation.
  • Communication – Effective communication is crucial. Franchisees must provide feedback to the franchisor, and the franchisor must respond to franchisee concerns and suggestions.
  • Changes and Adaptations – The business landscape evolves, and both parties need to be adaptable to changes in consumer preferences, technology, and market trends.

Successful franchisors have an open and transparent relationship with their franchisees and ensure 360 degrees of feedback through regular communication, franchisee engagement surveys and the establishment of franchise advisory committees/councils.  This develops trust between the two parties, and franchisees can share new ideas and give constructive feedback to develop and continuously improve the brand.

Franchise

Conclusion

Franchising is a remarkable avenue for entrepreneurs to realise their dreams of business ownership while leveraging the success of established brands. The franchisee-franchisor relationship forms the backbone of this model, with each party contributing to the overall success of the partnership.

As the franchise industry continues to evolve, fostering open communication, mutual respect, and a commitment to shared goals will remain essential for unlocking the full potential of franchising.

Watch our Webinar to find out if franchising is for you.

Contact us if you would like to learn more about franchising or discuss different franchise models.


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ESG

Uncategorized /

Author: Sara Pantaleo


ESG stands for Environmental, Social, and Governance. It’s a set of criteria that businesses and investors use to evaluate an organisation’s impact on society and the environment, as well as its ethical and governance practices. Small businesses need to understand the growing importance of these factors and how they can benefit from incorporating ESG principles into their operations.

Here’s a simple ESG breakdown of each component:

Environmental (E)

This aspect focuses on an organisation’s impact on the environment. It includes factors such as energy efficiency, waste management, carbon emissions, water usage, and pollution.
For a small business, it means considering ways to reduce its environmental footprint, like using energy-efficient appliances, recycling, reducing packaging waste, and sourcing eco-friendly materials.

Social (S)

The social component of ESG looks at how an organisation interacts with its employees, customers, suppliers, and communities.
For a small business, this involves promoting fair labour practices, ensuring a safe and inclusive work environment, fostering positive relationships with customers and suppliers, and engaging in philanthropic activities within the local community.

Governance (G)

Governance refers to the structure and practices that guide an organisation’s decision-making processes, including its leadership, board structure, executive compensation, and transparency.
For a small business, good governance means having clear roles and responsibilities, avoiding conflicts of interest, having transparent financial reporting, and respecting the rights of shareholders and stakeholders.

Net Zero

Why is ESG important for small businesses?

Reputation and Brand Value

Embracing ESG principles can enhance a small business’s reputation and brand value, appealing to socially conscious consumers who prefer to support responsible companies.

Access to Capital and Investors

Many investors, including institutional funds, are increasingly considering ESG factors when making investment decisions. A small business with strong ESG practices may find it easier to attract investment.

Risk Mitigation

Addressing environmental and social risks can reduce potential legal liabilities and financial risks. For instance, adhering to environmental regulations can prevent costly fines.

Employee Attraction and Retention

Organisations that prioritise employee well-being and diversity often attract and retain talent more effectively.

Market Opportunities

Adapting products or services to meet sustainable and ethical demands can open new market opportunities and drive innovation.

Circular Economy

Circularity – one of the solutions for ESG

Circularity is an essential concept that can significantly contribute to addressing ESG challenges. It refers to an economic model designed to minimise waste, promote resource efficiency, and ensure products, materials, and resources remain used for as long as possible.

The circular economy aims to break away from the traditional linear model of “take, make, dispose” and instead emphasises the following principles:

Reduce

Circular economy encourages businesses to design products with a focus on longevity, durability and reduced environmental impact. By creating products that last longer and are easier to repair, businesses can reduce the overall consumption of resources and decrease waste generation.

Reuse

The circular economy promotes reusing products and materials whenever possible. This involves refurbishing, repairing, and repurposing items to extend their lifespan and avoid unnecessary disposal.

Recycle

Recycling plays a crucial role in the circular economy by diverting materials from landfills and reintroducing them into the production process to create new products.

Regenerate

This aspect involves designing products and processes that positively impact the environment. It includes practices like using renewable energy sources, regenerating ecosystems and investing in sustainable agriculture.

Sustainability

How Circularity Addresses ESG Challenges

Environmental Impact (E)

Circularity reduces the consumption of raw materials and decreases waste generation, resulting in lower carbon emissions and a reduced ecological footprint.
It encourages the use of renewable resources and the adoption of eco-friendly practices, promoting overall environmental sustainability.

Social Impact (S)

The circular economy fosters local job creation in repair, remanufacturing, and recycling industries, supporting economic development and social well-being.
It can also lead to better working conditions, especially if businesses prioritise fair labour practices and ensure the well-being of their employees.

Governance (G)

Adopting circularity as part of your strategy often involves transparency and cooperation across the supply chain. Businesses can enhance their governance practices by ensuring responsible sourcing and tracking material flows.
Engaging in circular economy initiatives showcases responsible leadership and long-term thinking, which can attract responsible investors and stakeholders.

Community

Resilience and Risk Management

Embracing a circular economy can help businesses diversify their supply chains, reduce exposure to raw material price volatility, and become less dependent on scarce resources. Circular practices can appeal to environmentally conscious consumers, boosting brand loyalty and reputation.
Adopting a circular approach can also drive innovation, as businesses may need to rethink their product design and production methods.

For small businesses, incorporating circularity into their operations can be a cost-effective and practical way to address ESG challenges. By considering the lifecycle of products and materials and implementing measures to reduce waste and resource consumption, small businesses can contribute positively to sustainability and their bottom line. Moreover, adopting circular practices can align a business with the increasing demand for sustainable and responsible products and services in the market.

Incorporating ESG into a small business doesn’t necessarily require a complete overhaul; instead, it can be a gradual process of identifying areas for improvement and taking steps to implement positive changes. Small businesses can align their values with those of customers and investors, creating a more sustainable and responsible business model.

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