What is a franchise?


"The right or license granted to an individual, group, or business to market a company's goods or
services in a particular territory." -- Merriam Webster Dictionary.


One of the reasons I decided to add this page to my site is because over the years, I have received
so many calls from customers who insisted on speaking to someone from our corporate headquarters.
They were not interested in discussing with us any problems that they may have had in any of our
stores. Instead of giving us the opportunity to resolve the situation, they wanted to totally
by-pass the people in our business who were hired to handle such problems, and go straight to the
"top". And then, what happens is the people at the "top" refer them to us, and then they get upset.

Part of the problem, I think, is that most of our customers do not understand exactly what a franchise
is. I am not an authority on this subject, but I do have a basic understanding, and the definition
of a franchise listed above was obtained from the dictionary to hopefully help me explain what a
franchise is.

The company I worked for was a franchise of a major fast food chain. He paid this particular corporation
for the right or license to sell and market their product. This license gives him the right to use their
trademark, their name, and so on. Even though he is selling and marketing their product, the corporation,
as outlined by conditions within the contract or franchise agreement, does not have much control over
how this franchisee chooses to run his business.

I do not work for the corporation. I work for the franchisee. The corporation did not hire me, they don't
pay my salary, and they don't pay for any training that I might need in order to perform my job. They don't
provide my uniforms. All of these things are paid for by the franchisee.

The franchisee pays for the building he chooses for his business, whether he is leasing or not. The
corporation does not do this. There are certain standards, for example, that may require that building to
be of a particular design or color, etc., that the corporation has outlined in their half of the contract.
But, again, the franchisee is responsible for paying for any expenses incurred in getting his building to
fit their requirements.

The franchise pays for the equipment used in his store. However, the equipment, design, and manufacturer
have to be approved by the corporation.

All of the product sold in our stores is paid for by the franchisee, and then the cost is passed on to the
customer. The corporation didn't pay for this product. They "invented" it, but they didn't pay for it.
And all of the vendors we purchase this product from must be approved by the corporation. We can't buy it
from just anyone. The corporation has a list of suppliers that they have contracts with, such as Coca Cola
for example. We have to have Coca Cola products in our store. We can not sell Pepsi because this is what
the contract states (more or less). But the franchisee pays for this.

The corporation gets their "cut". Out of every dollar spent in our store, a certain percentage is paid to
the corporation for the use of their trademark. So, in a sense, the franchisee pays the corporation, not
the other way around.

Now, I know that there is a lot more to it than this, and if anyone out there can provide more information
that might help clear up this misunderstanding for a few people, then please e-mail me. I would be interested
in what you have to say.

I think that being the fact that since the franchisee is the one who seems to be "shelling" out all the
money, that it's only fair that if a problem occurs in one of his stores, he should be the one to decide
how it should be dealt with. The corporation, as I have stated before, has nothing what so ever to do
with my salary. It is up to the franchisee to make sure that I get paid. The franchisee is the one who
hired me, and the franchisee is the one who is responsible for making sure that I am trained well enough
to perform the duties of my job.

When working for this one franchisee in particular, I worked in the main office at one point. I worked in his
office for approximately four of the fourteen years that I have worked for this man. I was the person who
was designated to handle all customer complaints, but many times people would call our office and insisted on
having the number to the corporate headquarters. They didn't want to discuss the problem with me. These
people had already decided that we would not be cooperative before giving us the opportunity to show them
that we are interested in what they have to say.

The franchisee I worked for had been in business for over thirty years, and he did not stay in business for
that long by not listening to his customers or by tolerating bad service from his employees. If there was
a problem, it was taken care of however the situation warranted.