Franchisor vs. Franchisee: Roles in a Franchise
As you know, Scout & Molly’s operates as a franchise business with locations in 14 states from coast to coast. Our franchise approach is important to us because it’s a great way to do business, serve customers, and it offers prospective entrepreneurs an effective way to run a business.
You’ll often hear terms like “franchisor” and “franchisee” whenever someone mentions the topic. We’d like to explain what these mean and their significance in a franchise business arrangement.
The Role of the Franchisor
The term, franchisor, refers to the owner of the franchise concept. They legally own the licensing rights and all the individual franchise units within the business.
Franchisors are facilitators for franchisees because they provide support with branding, marketing, training, supplies, and technology. Their success hinges upon the success of the individual franchises, which gives them an incentive to foster a stimulating business environment for franchisees.
Advantages & Disadvantages
One advantage to being the franchisor is that you have ultimate authority and control over the direction of the business. Franchisees have some leeway in running their locations, but the franchisor can veto anything that doesn’t fit their brand image or mission. Franchisors also enjoy the ability to scale their business and boost revenue by adding new locations in diverse areas.
A drawback to being a franchisor is that you’re liable for whatever happens in the various business locations. This includes legal troubles and turnover. Fortunately, the more you expand as a franchisor, the more you can spread business risk.
The Role of the Franchisee
Franchisees pay startup fees to enter a franchise agreement, which gains them access to a business system with a successful track record elsewhere. You would have the right to use the franchisor’s brand, business supplies, and marketing strategy to launch a business and experience profits sooner than sole-proprietorships.
Advantages & Disadvantages
The greatest benefit of becoming a franchisee is that you get to jump into a proven business model right out the gate. While there are substantial startup costs, the money goes to finance training, building purchases, advertising, and more. You don’t have to build a business from scratch if you enter a franchise agreement.
It’s a great medium between being an employee (with no ownership or control) and working totally alone in business. The major disadvantage is that you must operate according to the franchisor’s rules, which could be contrary to your designs. That’s why it’s important to research and discern a good franchisor/franchisee relationship with an outstanding business before signing up for anything.
Franchise with Scout & Molly’s
We hope this shines light on the distinction between franchisors and franchisees. If you’re thinking about entering a business partnership like this, then you should explore franchise opportunities with Scout & Molly’s.
You can finally own a business within a proven structure like ours. Learn more about franchising and the fashion industry by reaching out to us at 610-768-0114.