Tweet

Many Franchisors Prefer Multi-Site Operators These Days

Written by: Michael Hemenway

Article Overview: Franchisors are increasingly taking in more multi-site franchisees because they provide several facilities. For example, this way, the franchisors don’t have to individually develop a territory one at a time and can expand at a faster rate.

Many Franchisors Prefer Multi-Site Operators These Days

If you have been following the history of franchising, you will notice that the profile of a successful franchisee has changed over the years. Before, a successful franchisee was such a person who used franchising as a safety net and was an owner-operator. He worked himself in his unit and was happy with the success it brought him. Now, cut to the present scenario. Today, college graduates as well as corporate bigwigs are starting franchises. There are even business entities who are investing in the franchise industry. Do you think these people will be happy in running a single location? Of course not; and that is why there is a shift from single-site, single location franchisees to multi-site franchisees.

The multi-site franchisees can be of two types. They can either be an area developer or a franchisee who increases his unit number after the success of the first. The difference is that the first one signs the franchise agreement for opening more than one unit within a given period of time while the second franchisee enters a fresh franchise agreement every time he or she opens a new unit. Now, the question is why are the franchisors so happy to see the multi-site franchisees? Because, they are the ultimate winners in this scenario! When a single person buys the right to open more than one unit, the job of the franchisor becomes so easy! Now, the franchisor doesn’t have to look for more franchisees to respond to its franchise business for sale offers in that particular area.

Hence, a franchisor that supports multi-sites franchisees finds its resources free to support other new markets. So, it can spread faster within a short period of time. Along with increase in unit numbers, the franchisor enjoys various benefits. The market position of the franchisor increases with the expansion of the chain. That attracts new franchisees looking for top franchises in the market. It also allows the franchisor to become an international franchise faster. The distinguished brand-name of the franchisor ensures that it can have more facilities from the suppliers and manufacturers. As a result, the profit margin of the whole concept increases over time. That is why when a franchisor chooses multi-site franchisees; the brand-name and market value of the company increases automatically.

Related Articles
  Aid That Franchisors Provide to Franchisees
  Who Is Answering Your Phones? A Look At Answering Service Staff
  Transfers vs. New First Time Franchisees
  How Can You Get Out of a Franchise?
  The Multi-unit Movement benefits Franchisors and Franchisees

Article Tags: brand name, business entities, business for sale, corporate bigwigs, franchise agreement, franchise business, franchise industry, franchisee, franchisees, franchisor, franchisors, international franchise, market position, owner operator, period of time, safety net, short period, single site, top franchises, unit numbers



Related Forum Posts
Think like an Association - Hey Sebastian, Maybe you could try thinking like an Association... I would study the structure or formats used by other Associations. What are they doing to add value for their members? The BBB plays a monitoring role for consumers by gathering data about business' that are behaving badly. And they're pretty successful at it too. Maybe you can offer a 'Platinum Program' that franchisors buy into. Accredited members only. Criteria could be strict: 1. Age (stability): 10+ years 2. Satisfied franchisees: 85% + satisfaction 3. Size (stability again): 250 units 4. Strong profits 5. Great management -Maybe a 'Gold Program' for those Franchisors that aren't quite at that level, but can strive to reach it... -Top 100, 500, 1000 Listing for qualified members... maybe a slap at Entrepreneur.com and their biased top 10 lists... -Maybe act as a monitor like BBB? -Maybe team up with FranSurvey OR do something similar for each member (not sure about Fransurvey's rep, but I like the concept) There's so much discontent within the franchising arena that I think if you were part of the solution, then you could create a win/win with your Association. The only downside is that this power can get abused if there aren't good checks and balances within the association.
Re: Kevin's Case Study #6 - Marketing an information resource? - [quote="Evan":3ndb7usp]Hi Sebastien, I'm wondering about two things: 1) What is your current revenue model? 2) Why would franchise owners choose to sign up with you over the lead generation companies? Is there some kind of quality control certification that you could award them to say that they are a World Franchising certified franchise? I'm not clear on what benefits a company seeking to franchise would really get from your site beyond the lead generation component.[/quote:3ndb7usp] Hello Evan, 1. We currently make money from what you may call lead generation. Franchisors pay us a fee to be on our websites and in our top seller franchise guides. We also generate money from other avenue; mostly by selling hard-to-get information about franchising (UFOCs, etc...) 2. That's exactly what I'm trying to answer.... I want to get away from the lead generation perception. I want to be seen as a good information resource, which we are. I have started to take the association angle and I am now looking to provide great benefits to our Members (used to be called clients). I think I'm on the right way. I made a lot of progress the last couple days.
enRoute ads - 10 days with my new salesmen - Hi Guys, As some of you may know I hired a sales person for my business. I picked him amongst 50+ interviews, so I did do my due diligence. For any of you who have had experience with outbound sales reps in your company could you please shed some light on these statistics and let me know what you think: Days Employed: 11 Calls Made: 200 Average length of call: 3 minutes Sales: 0 Closing Rate: 0 Previous closing rate at Astral Media: 5% He is selling billboards instead of radio, for an unestablished company vs. an established one There seems to be large gaps in calling made in his daily log, on average he is making 20 calls a day. I am going to try to increase this by providing him with calling lists versus him creating his own. (I will keep you posted on this). I am just wondering, in your experience, what kind of regiment do you have your cold callers work on, 6 hours? 4 hours? 7 hours? And did you notice a curve occur with closing rates as time progressed and experience increased? If so when did you notice this begin to occur, I have him on a 1,500.00 NON-RECOVERABLE sales draw salary which ends in 6 weeks (approx).
Information about doing franchise business in China - CHINA’S FRANCHISE LEGAL SYSTEM Introduction Franchises has a history of more than one hundred years in foreign countries, now it has developed to be a mature business mode, and it is widely used in many countries, especially the developed ones. Recently, franchises has been developing fast in China, covering more than sixty industries and trades such as catering, retailing, clothes-washing, indoor decorations and gym. However, the market order of franchises is chaotic in some industries and areas. There are also some illegal and criminal activities under the guise of franchises. Under such circumstances, several important laws have been promulgated to regulate the commercial franchising activities. Applicable Legislation The main legislative provisions governing the commercial franchising in the PRC are: the Measures on Administration of Commercial Franchises; and the Measures on Administration of Archival Filing of Commercial Franchises; and the Measures on Administration of Information Disclosure of Commercial Franchises Qualification for Franchisors According to the laws, the franchisors as those enterprises who own such business sources as registered trademarks, enterprise logos, patents and proprietary technology, and license these business sources to franchisees. Firstly, the franchisors shall be enterprises, excluding other economic organizations and individuals. Secondly, the trademarks which can be licensed to franchisees shall be registered trademarks. According to the Trademark Law, the trademarks, whether registered or not, are protected under the laws, though there is difference in the vigor and extents of protection. It seems that the Ministry of Commerce has restrictions in recognizing trademarks, since it only provides “own trademarks to be licensed to others” at large, which causes chaos in practice. In the cases relevant to franchising disputes which we provided legal service to, all of them involve the situation that the franchisors granted licenses of non-registered trademarks or the trademarks which were in application to others, and when there was infringement on trademarks, the franchisors were unable to prevent infringement on trademarks. Then the interests of the franchisees could not be realized. What’s more, franchising activities with non-registered trademarks also, to some extent, encourage commercial frauds. Thirdly, the logos, patents and proprietary technology of enterprises are included in the business sources to be licensed to others for the first time, which enlarges the application scope of franchises and will improve the development of franchises. Requirements to be Met in Carrying on Franchising Activities In addition to the condition that only the enterprises will be allowed to carry on franchising activities referred to above, the franchisors shall also have mature business modes, and are able to provide business guidance, technology support and training. The enterprises which copy the manuals, websites and enlisting documents of others, and have no service abilities for providing business guidance, technology support and training shall be excluded. What needs pointing out is that even these enterprises that are allowed to carry on business may face with the suits claiming them for unfair competition and infringements on intellectual properties. In addition, the Measures clearly request that the franchisors shall operate at least two directly operated shops, and the period of operation shall be more than 1 year, which aims to prevent frauds by the way of franchising. Information Disclosure Requirements and Regulation on Franchisors Information disclosure system is the core system of franchising. The laws provides that the franchisors shall establish and implement a perfect information disclosure system, and provide the relevant information and franchising contracts in written form, at least thirty days before execution of franchising contracts. It also sets out the specific provisions on the information which shall be provided by franchisors, including the basic conditions and commercial reputation records of the franchisors and their legal representatives, business sources owned by franchisors, abilities of franchisors to provide service to franchisees and management and supervision on business of franchisees, franchisee fees and the payments, and budgets for investment in franchising shops. To the franchisors that violate these provisions, the authorities in charge of commerce will order them to rectify, charge penalties and make public statements. Archival Filing and Public Announcement Systems To protect the franchisees’ lawful rights and interests, considering the asymmetric information between franchisors and franchisees, in addition to intensifying information disclosure requirements and regulating the activities of franchisors, the Measures also bring in the archival filing and public announcement systems. The Measures provides that the franchisors shall make a filing with the commerce administrative department within 15 days after the execution of franchising contracts for the first time. Anyone who intends to engage in any commercial franchise activities within a province, autonomous region, or municipality directly under the Central Government shall go through the archival filing formalities in the commerce administrative department of the people’s government of the province, autonomous region, or municipality directly under the Central Government where the franchisors are located. Anyone who intends to engage in any commercial franchise activities beyond a province, autonomous region, or municipality directly under the Central Government shall go through archival filing formalities in the commerce administrative department of the State Council. Any franchisor having been engaging in franchise activities before May 1, 2007 shall apply for archival filing at the commercial administrative department. The Ministry of Commerce has established the national network for archival filing work relating to commercial franchise. Any franchisor shall go through the archival formalities through the government website. The general public may obtain the following information through the government website of the Ministry of Commerce: (1)The registered trademark(s), enterprise mark(s), patent(s), know-how and other business resources of the franchisor; (2)The franchisor’s archival filing date; (3)The location of the legal business place, contact information and name of the legal representative of the franchisor; and (4)The location of the business place of the franchisee(s) within China. The authorities in charge of filing will cancel the archival filing if there is any following activities of franchisors, and make public announcement on the government website: (1) the business licenses of the franchisors have been withdrawn by the registration administrative authorities for illegal business; (2) the authorities in charge of filing receive judicial suggestion letter on cancellation of archival filing from the judiciary for illegal business by franchisors; (3) the franchisors conceal the relevant information or provide false information, which has been proved; (4) the franchisors carry on cancellation by themselves. In addition, the illegal activities of the franchisors will be announced to the public. By Erex Chen, a Chinese lawyer based in Shanghai.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

How To Become A Member of the Paparazzi

Five Daily Marketing Habits to Increase Sales

What If You Had a 100% Success Rate?

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.