Learning About Excessive Franchise Control with The Franchise Maker

There has been a lot of buzz about excessive franchise control. We want to take a few minutes to educate you as to why this is a concern when it comes to franchising.

Franchising for years has given entrepreneurs an opportunity to own and operate their own business under the guidance of a franchisor (you). Rather than an entrepreneur trying to start a business blindly on their own it is a safer bet to follow a business plan from someone else (like you) who has spent years creating, developing and fine tuning it.

When You Cross The Line

The relationship between you and the entrepreneur (now franchisee) is symbiotic in nature, but your future franchisees are also independent of you. This type of relationship is not a partnership or an employee/employer relationship and there is no fiducial responsibility between the two of you (check out this article to learn more about the franchise relationship). Bottom line is that your future franchisees are responsible for every aspect of running their business (which includes hiring, disciplining, firing and managing employees…just to name a few). In a franchise relationship you want to be very careful not to cross the line.

To avoid crossing the line means that you do NOT exercise control over your future franchisee’s day-to-day operations. This means that you do not hire their employees; you do not control the lighting or temperature of their business; you do not set the policies for their operations; etc. When you cross this line you not only violate basic independent contractor rules but also severely jeopardize any type of protections they are afforded to you in the franchise relationship.

The reason why this has become more of an issue recently is because unfortunately there are franchisors out there that are crossing this line (more on franchising and joint employer relationships). And if indeed it can be demonstrated that they are exercising too much control over their franchisees then the business may be classified as a company-owned location, subjecting the franchisor to taxation, opening them up to unionization, complying with the affordable healthcare act and other politically motivated initiatives all of which could have severe implications on their franchise system.

The Solution Is Simple!
 
When you franchise your business you are franchising the business model you have created. This is known as “business format franchising” (read more about business format franchising on our main website). The idea is that if your franchisees follow your methods, techniques, processes and your overall best practices they can attain the same type of success as you. But this also means giving your franchisees the independence to make their own operational decisions. Every franchise structure that we build and franchise system that we create are put together to protect you against falling into such a pattern of excessive franchise control.

Franchising is built on the premise that other people can be successful at what you’ve created. Ultimately the franchisee is the one that calls the shots in their business. You still have control over what your future franchisees offer, but how they do it is ultimately their responsibility.

As long as you are passionate about wanting to help other people succeed and recognize that your future franchisees are the ones that control their day-to-day operations then you have nothing to worry about. The Franchise Maker will create a franchise model for you that protects you against such liabilities. Please don’t hesitate to call us directly at 1-877-615-5177 or Contact Us and we will be happy to explain excessive franchise control further and answer all your questions.