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Ethical franchising

Written by: Diarmuid Kieran

Article Overview: Ethical franchising important for business success

Ethical franchising

To have a good reputation with franchisees and in the franchising industry, it is important that franchisers have an ethical framework to operate by.

In addition, franchisees should behave to certain standards so that they can progress their business(es).

Many companies are members of associations, such as the International Franchise Association or the British Franchise Association, that have an ethical code structure in place.

These codes are a way for franchisers to self-regulate and franchisees to have a good idea of the role they need to play in making the franchise as a whole more successful.

They will not have an answer to every dispute, but a set of principles will be established to ensure problems are dealt with correctly and as amicably as possible.

Therefore, franchisers that are not involved with associations should still have a set of guidelines for themselves and franchisees to work from.

At the cornerstone of any code that has been or should be devised is honesty and trust. There should be no ambiguity when franchisers advertise for franchisees and in what franchisees tell franchisers about their past and current financial situation.

Each party needs to fill their part of the agreement and be open about any problems that occur, which will mean both the franchiser and franchisee knows exactly where they stand.

Once a franchise is up and running, both parties need to have a system in place where it is ensured that when one gets in touch with the other, by phone or email, it is picked up quickly and a response is swiftly made.

Effective communication will help to create trust between franchisers and franchisees and it is also important for the financial progress of franchises, for example if a sales system is not working, the sooner an improved version is discussed and implemented the more money a franchise will make.

A code should highlight the need for teamwork and mutual respect between both parties so that franchisees get a degree of responsibility to improve their franchise systems, as long as they work within the business structure.

Franchisers should also recognise and give awards to franchisees that achieve better than expected results and show major commitment to the franchise.

In addition, as part of the franchise agreement, there should be a straightforward method for dealing with internal disputes and all national and state laws concerning franchising must be strictly followed.

Following a structured code with these and other aspects will help to create a positive image and reputation for the franchiser and each individual franchise.

Franchisers will be more likely to attract potential franchisees, as most of them will talk to current franchisees before making a decision on which franchise they want and franchisees will benefit from high levels of consumer loyalty and satisfaction.

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Any franchising horror story? - I am always writing about the benefits of franchising in this forum. Although I don't own a franchise I do believe in franchising is a great business model. Do any of you have horror stories to share about franchising?
Re: New member from the USA - [quote="Ethical":cf54b60n][quote="Mal Tindle":cf54b60n]Hi Ethical, Welcome to the forum, it's good to see new people getting involved in any forum and you have picked one of the very best. I haven't been a member too long but am a regular now because of the support and resources available here which are most impressive. I see you work in the recycling of ink cartridges and I wish you well with that and attracting traffic to your site. best wishes, Mal.[/quote:cf54b60n] Thanks for your welcome,Mr.Mal,are you located in the USA,or the UK o'GB.or some other locale?,and if may I have your permission to ask,What kinda(kind of) entrepreneurship are you involved with?,as anything in life,education,and correct info...is the key to success,and Profesional forum attendance,is enlighting.Thanks again for your welcome.[/quote:cf54b60n] Hi Again Ethical, Thank you for your reply, I live in the UK and don’t have a product as such to sell like you but I am an Internet Marketer and owner of the ‘Work From Home Gems’ site below. I specialise in finding and recommending different ways to make money on the internet as an affiliate. I very much enjoy working in this sector and hope to work full time from home in the future. Don’t forget to set up your signature as recommended by GT above as this is a simple way to ad the URL of your website and this will show on every post you make, best wishes, Mal.
Re: STARBUCK - Licensing vs Joint venture - [quote="bmueller47":czemqiul]I often come here to learn something, therefore I would like to know what is the real practical difference between licensing and franchising. I might have an answer, but you are at the forefront with your knowledge.[/quote:czemqiul] Very good question. Although I am not an attorney, I will do my best to highlight what I believe are the main differences between franchising and licensing. First, here in the US, franchising is very regulated buy the Federal Trade Commission. Not anyone can franchise, you have to go through various steps. Licensing doesn't come with as much regulation. The franchisee can expect to have a very close relationship with his franchisor. In most cases, the franchisor will offer training, and on-going support. The franchisee will be able to use the franchisor's copyrights, trademarks, logo and so on. The franchisee is like the public face of the franchisor. This is I think the high value of franchising. Also, a franchise agreement will most likely define territories. The relationship between the licensee and the licensing company is much looser. In most cases, the licensee won't be able to retain the rights to trademarks, company name, etc and will have to establish his own identity in the marketplace. Licensees rarely get a protected territory which means you next door neighbor could be your competitor... Obviously, franchising is more expensive than licensing because you get a certain "safety". Again, franchising is highly regulated whereas licensing is not. There are many other differences between franchising and licensing but I think these are the main ones.
Franchising is not a "no-cost" expansion model - Don's point above was right, and, if he only lost $5,000 getting into franchising, he got off very cheap. Getting into franchising is a serious business. We estimate that you need [u:32pu99ec]at least [/u:32pu99ec] $50,000 to do it right -- and it can cost five times that much for an aggressive expansion plan. Jim was right on. If you choose to franchise, you are getting into a new business -- the business of selling and servicing franchises. Mark
Re: Welcome New Moderators in Addition to Our Fine Team! - Hi Folks, My specialty is franchising. I have sold franchises for a living for quite some time. (I even sold one to a relative!!) I currently own a franchise consulting company. We match people up with the franchise that fits the business model they are looking for. Hope to contribute to the forums here. If anyone has questions about franchising let me know. I like helping others. Talk soon, John .


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