What Sort Of Controls Do Franchisors Typically Exert Over Franchisees?

There are various reasons why starting a franchise is much preferred by people over an independent business. The main reason is that, with franchising, you don’t have to develop a business model of your own. But it comes with a price; the franchisor, in order to maintain the brand-name and its business model, will impose a number of restrictions on the people who buy a franchise from them. They are fully justified in placing those restrictions. It has taken them years to build consumer awareness and brand-image. They cannot risk them by allowing novice business owners (which most of the people who buy a franchise are) to run the business according to their own way! It will not only hamper their present business, but also damage the reputation of the brand that will take years to rectify!

Now, let’s check out what the restrictions are that best franchises generally impose on the people who buy a franchise from them.

Restriction on site: A franchisor has a clear picture of what kind of people make up its customer base. So, when you are starting a franchise that is an outlet, it will make sure that the site you have selected has the required demography around it. There are other things that will also be taken into consideration. For example, if your franchise is of something that is niche or up-market, the location strictly has to be in a fashionable area. The floor size is important for people who buy a franchise from the food franchise category (especially sit-down diners or restaurants). Parking is another big criterion for site approval by many top franchises in the industry.

Restriction on territory: franchise businesses that offer exclusive territory will restrict their franchisees’ area of sale. This is very important for the whole chain, as competition between two franchisees of the same franchisor is detrimental to the betterment of the franchise operation.

Restriction on what you can sell or offer as service: The franchisor has the full right to tell the franchisees what they can and can’t sell or offer as service from their outlet. This also ensures that uniformity is maintained across the chain. This restriction, many times, causes problem for the franchisees. They may be forced to sell products/service that are unpopular in their location and lose out, because they are not getting to offer the local favorites. But top franchises sometimes listen to the suggestions of their franchisees in this matter.

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