{"id":10481,"date":"2020-05-09T12:04:56","date_gmt":"2020-05-09T06:34:56","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=10481"},"modified":"2021-03-24T18:12:22","modified_gmt":"2021-03-24T12:42:22","slug":"classification-of-activities-undertaken-by-franchisees","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/classification-of-activities-undertaken-by-franchisees\/","title":{"rendered":"Classification of Activities Undertaken by Franchisees under Franchise Agreement"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Anyone that intends to enlarge the business must have come across the growth strategy of franchising.&nbsp; It is one of the fastest and most accessible modes of business expansion. A primary reason to choose the franchise business is its increasing success rate and corresponding decrease in failure rate.&nbsp; The initial investment required to start a franchise business is minimalistic as the working model already exists. It eliminates the need to invest in various components by bringing the business on track. This blog outlines the roles and responsibilities of a franchisee as per the <a href=\"https:\/\/swaritadvisors.com\/franchise-agreement\" class=\"text-primary\"><strong>franchise agreement<\/strong><\/a>.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3b476b9c8ef\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3b476b9c8ef\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/classification-of-activities-undertaken-by-franchisees\/#Who_is_a_Franchisee\" title=\"Who is a Franchisee?\">Who is a Franchisee?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/classification-of-activities-undertaken-by-franchisees\/#Roles_and_Responsibilities_of_Franchisee\" title=\"Roles and Responsibilities of Franchisee\">Roles and Responsibilities of Franchisee<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/classification-of-activities-undertaken-by-franchisees\/#Relationship_between_a_Franchisor_and_a_Franchisee\" title=\"Relationship between a Franchisor and a Franchisee \">Relationship between a Franchisor and a Franchisee <\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/classification-of-activities-undertaken-by-franchisees\/#Nature\" title=\"Nature\">Nature<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/classification-of-activities-undertaken-by-franchisees\/#Communication\" title=\"Communication\">Communication<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/classification-of-activities-undertaken-by-franchisees\/#Enforcement\" title=\"Enforcement\">Enforcement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/classification-of-activities-undertaken-by-franchisees\/#Legal_Disputes\" title=\"Legal Disputes\">Legal Disputes<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/learning\/classification-of-activities-undertaken-by-franchisees\/#Attributes_of_Successful_Franchisees\" title=\"Attributes of Successful\nFranchisees\">Attributes of Successful\nFranchisees<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/learning\/classification-of-activities-undertaken-by-franchisees\/#Why_is_it_essential_to_get_the_Franchise_Agreement_checked_by_a_legal_consultant\" title=\"Why is it essential to get the Franchise\nAgreement checked by a legal consultant?\">Why is it essential to get the Franchise\nAgreement checked by a legal consultant?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/learning\/classification-of-activities-undertaken-by-franchisees\/#Key_elements_of_a_Franchise_Agreement\" title=\"Key elements of a Franchise Agreement \">Key elements of a Franchise Agreement <\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/swaritadvisors.com\/learning\/classification-of-activities-undertaken-by-franchisees\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_is_a_Franchisee\"><\/span>Who is a Franchisee?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A\nfranchisee is an individual who handles the operation of a franchise business.\nThe franchisees hold power to utilize the trademarks associated with the brands\nof an existing business. A franchisee has the proprietary knowledge of the\nmarket, thereby, sells the same brand by following the same standards\nprescribed by the franchisor\u2019s business. The franchisee becomes an independent\noperator and owner of the third-party retail outlets called franchises.<\/p>\n\n\n\n<p>When\nan entrepreneur wants to accumulate more market share and increase the\ngeographical presence of his business at the cheapest cost, then he chooses to\ncreate a franchise for his brand name and products. Such an entrepreneur is\ntermed as the franchisor. <\/p>\n\n\n\n<p>The franchisor is the existing or original business owner that sells the right to use its <strong>business model<\/strong> and branded products. In return, the franchisee needs to pay specific fees or royalty and comply with the obligations set by the franchise agreement. &nbsp;<\/p>\n\n\n\n<p>The franchisee purchases the right to sell the franchisor\u2019s goods and services under the existing business model &amp; <strong><a href=\"https:\/\/swaritadvisors.com\/trademark-registration\" class=\"text-primary\">trademark<\/a><\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Roles_and_Responsibilities_of_Franchisee\"><\/span>Roles and Responsibilities of Franchisee<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Each\nfranchise agreement outlines the terms, conditions, roles, and responsibilities\nof a franchisee. Majorly a franchisee has four core responsibilities that lead\nto the success of franchising:<\/p>\n\n\n\n<ul><li>The first and foremost\nduty of franchisees is to protect the franchised brand. It can only be accomplished\nby operating the franchised business under strict compliance and also adhere to\nthe operating standards.<\/li><li>Another duty of a\nfranchisee is to build a strong customer base by offering only standard\nproducts &amp; services which are approved by the superior customer service.<\/li><li>The franchisees are responsible for allocating competent human resource.\nThey have to ensure that all employees are adequately trained, and the\nfranchised business is staffed all the time.<\/li><li>Lastly, the franchisees\nmust also implement robust marketing techniques. A franchisee must promote and advertise\nthe franchised brand according to the guidelines given by the franchisor.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Relationship_between_a_Franchisor_and_a_Franchisee\"><\/span>Relationship between a Franchisor and a Franchisee <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Several\nunique characteristics embody the franchisor and franchisee relationship. A\ncord that ties together both franchisor and franchisee is the franchise\nagreement. Let\u2019s perceive some facets of the relationship between franchisors\nand franchisees:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nature\"><\/span>Nature<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The\nnature of a franchisor and franchisee relationship is similar to that of parents\nand children. During the inception stages, the franchisor fosters the\nfranchisee by providing necessary guidance and training to ensure the success\nof the franchised unit. As time passes, the franchisee becomes self-sufficient;\nthus, the franchisor enables him a greater flexibility, assuming that he demonstrates\nthe ability to operate the unit efficiently.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Communication\"><\/span>Communication<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>&nbsp;In any business, communication is crucial, and\nfranchising is no exception. The franchisor set a tone for fluent communication\nwith franchisees by using telephone instead of emails. Frequent communication\ndenotes that franchisors are committed to the success of their franchisees,\nwhich is beneficial for both parties in the long run. A lack of communication\nhinders the progress of the franchise business.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Enforcement\"><\/span>Enforcement<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>&nbsp;Though franchisees are independent business owners,\nbut they are always under obligation to operate as per the terms of the franchise\nagreement. The franchisor has to ensure that the franchisee is complying with the\nterms of the agreement. A franchise agreement covers all the essential factors,\nsuch as operating procedures, utilization of trademark, and marketing\nstrategies. In case the franchisee breaches the agreement, the franchisor can then\ntake necessary actions, as stated in the agreement, which may also include\nterminating the franchisee&#8217;s operating rights.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Legal_Disputes\"><\/span>Legal Disputes<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Even if the agreement defines the relationship between a franchisor and franchisee, some disputes may incur that require arbitration from higher legal authorities. Lawsuits determine whether the franchisees should be considered as employees instead of independent owners and extent of liability the franchisors have to bear for the actions of the franchisees.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Attributes_of_Successful_Franchisees\"><\/span>Attributes of Successful\nFranchisees<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following\nare some qualities that a franchisee must incorporate in order to operate the\nfranchised unit successfully:<\/p>\n\n\n\n<ul><li>A franchisee must not be reluctant in nature. There should be an eagerness to meet specific requirements and thrive on making the franchised operating model nothing but a revenue-generating unit. Franchisees should contemplate on the marketing materials to use, suppliers to work with, and the products or services that can be offered to improve the productivity of franchise.<\/li><li>In exchange for the licensing right, intellectual property, and readymade operating system, a franchisee should report his\/her sales and expenses to the franchisor. Franchisees must follow the instructions on using the products &amp; services. Additionally, he must comply with the advertising requirements of the franchisor. A franchisee shall follow the set protocols each week, month, and year. If the franchisee fails to meet the brand standards, it risks his position and breaches the franchise agreement.<\/li><li>The success of a franchisee is measured each day based on the franchise&#8217;s performance. It requires more self-sufficiency than any other corporate managers have had. A well-structured franchised system can provide a level of support that contributes to the franchise&#8217;s success.<\/li><\/ul>\n\n\n\n<p><b>Also, Read our Article:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/what-is-the-step-by-step-procedure-for-private-limited-company-registration\/\"><\/a>Step by step procedure for Private Limited Company Registration<\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_is_it_essential_to_get_the_Franchise_Agreement_checked_by_a_legal_consultant\"><\/span>Why is it essential to get the Franchise\nAgreement checked by a legal consultant?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Franchisees often ponder if it is worth spending\nmoney on getting assistance from a legal expert to review a franchise\nagreement. The reasons listed below justify the need for a lawyer for the same:<\/p>\n\n\n\n<ul><li>A franchisor ought to have numerous controls in the agreement to ensure\nthe uniformity of operating system, protection of its brand, and quality of its\nproducts or services. However, such a contract shall be seen as one-sided,\nunfair for the franchisee. A legal expert can guide you if the franchisor has\ngot the balance right.<\/li><li>Franchise agreements specify the services a franchisee will get from the\nfranchisor. A solicitor helps you give a better understanding of the extent to\nwhich a franchisor utilizes his power.<\/li><li>Further, an affiliated solicitor can clarify the rights which you are\ngetting under the agreement along with the obligations and performance targets that\nyou are expected to attain. With professional guidance, you will be able to\ndetermine those clauses that otherwise could remain hidden. A lawyer will bring\nyour focus on the circumstances in which the franchisor can terminate the\nagreement and any other legal obligations that you may have not noticed.<\/li><li>A lawyer reviews the franchise agreements from a legal perspective and\nindicates unusual elements in the agreement (if any) that may require\nadditional explanation from the franchisor\u2019s side.<\/li><\/ul>\n\n\n\n<p>Once you apprehend your rights and obligations under the agreement, you can make a well-informed decision on whether to enter into the franchising or not. Therefore, It is of utmost importance to reach out to an affiliated solicitor who has expertise in reviewing the franchise agreement. A reliable option for you could be <strong><a href=\"https:\/\/swaritadvisors.com\/\" class=\"text-primary\">Swarit Advisors<\/a><\/strong>. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_elements_of_a_Franchise_Agreement\"><\/span>Key elements of a Franchise Agreement <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Here\nare the salient components that should be there in all franchise agreements:<\/p>\n\n\n\n<ul><li><strong>Managerial Assistance<\/strong>&#8211; The agreement must demonstrate the operational practices that franchisees should follow. When doing business with a respectable &amp; reliable franchise, the franchisee gets proper managerial assistance.<\/li><li><strong>Quality Control- <\/strong>Quality assurance is substantial for all types of goods. The agreement accentuates quality control measures that the franchisee should adopt.<\/li><li><strong>Higher Rate of Success-<\/strong>The success rate of franchised businesses is relatively more than that of other independent businesses. With the course of action already defined in agreement, the success becomes higher.<\/li><li><strong>Costs- <\/strong>The agreement gives complete information on costs involved in acquiring the franchise. It provides the fees and <strong><a href=\"https:\/\/en.wikipedia.org\/wiki\/Royalty_payment\">royalties<\/a><\/strong> for which the franchisee is responsible.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Franchise\nbusiness creates opportunity for growth and expansion as the franchise unit operates\nin multiple locations. If you also have an urge to establish higher-level success\nin a short period, then opt to franchise.\n\nTake professional\nassistance from Swarit Advisors to frame the franchise agreement as we know the\nright way. \n\n\n\n<\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/swaritadvisors.com\/learning\/a-comprehensive-guide-to-draft-a-memorandum-of-understanding-agreement\/\" target=\"_blank\" rel=\"noopener noreferrer\">Guide to Draft a Memorandum of Understanding Agreement<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Anyone that intends to enlarge the business must have come across the growth strategy of franchising.&nbsp; It is one of the fastest and most accessible modes of business expansion. A primary reason to choose the franchise business is its increasing success rate and corresponding decrease in failure rate.&nbsp; The initial investment required to start a [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":10483,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[628],"tags":[630,629],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/10481"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=10481"}],"version-history":[{"count":8,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/10481\/revisions"}],"predecessor-version":[{"id":18377,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/10481\/revisions\/18377"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/10483"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=10481"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=10481"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=10481"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}