Corporate Vs Franchise
Posted On June 7, 2010
Corporate vs. Franchise?
I know the difference is that franchises are privatly owned, but doesnt the corporation maintain some oversight?
They wouldnt want a franchisee to ruin their name by changing the menu or say by not cleaning the restaurant and hiring very rude people, as it would ruin their image…no?
How exactly do franchises answer to corporate if they are privatly owned?
Virtually all successful franchises have an idiot proof system in place for every aspect of their business. They leave nothing to chance or discretion; everything is done the franchisor’s way; and consistent follow-up ensures that. This is very advantageous to the franchisee as well because risk is minimized and chances for success are greatly enhanced.
Also, most successful franchises have very strong Franchise Agreements in place that tend to be biased in favor of the franchisor, which it must be, to preserve the high standards that are to be 100% adhered to. If a franchisee doesn’t follow the franchisor’s standards, the franchisor then has the contractual power to force the franchisee out of the system. Usually this extreme measure won’t happen without the franchisee being duly warned first.