Small Franchising Issues

One fairly consistent complaint that pops up amongst owners of small franchises centers around ongoing royalties and advertising fund fees. Royalty fees are standard fair in franchising, but they understandably hurt the small business owner more than the big in most cases. Many small franchise owners grow disenfranchised with their franchisors, because they feel that they aren't getting much in return for the piece of their already little pie that they are giving up.

The Issue

Most small franchise owners are bringing in a huge profit. Many are simply men and women who got tired of making money for someone else and decided to start doing for themselves. With a small franchise they are able to be their own bosses and bring in a livable income to provide for the needs of themselves and their families.

Understandably, a franchisor taking 7% of their "just enough" hurts them more than large franchisors taking 7% of their big franchises' "more than enough". Still, the real issue arises from what is perceived as a lack of value for the cost of operating under the small franchising organization. When you are paying to use a name, should an unknown name cost the same (percentage-wise) as a well known one? What is the real role of the franchisor in regards to the franchisee?

Franchisor Support

Most franchisors are extremely helpful when it comes to getting a franchisee's business established. The franchisee looks around and sees the support and assistance and thinks, "wow, this is definitely worth paying into." Once the business is up and running the franchisor drops back and the franchisee starts to think that royalty percentage isn't as worthwhile as it was at first.

Presumably, the franchisee would be a lot more upset if the franchisor was overly involved in the running of his or her business, though. So what role should franchisor's play? Ostensibly, the franchisor (if it's a very good organization) should be focused on promoting the brand itself and on developing the brands products and services, both of which make the brand more profitable for themselves and for their franchise owners.

Speaking Up

If an owner feels that their franchisor is not living up to their role of development and promotional support, then they should speak up. Just as in anything in life, you can't expect for others to anticipate your needs if you don't express them. There is no guarantee that a franchisor will listen, but there is a better chance of something being done than there is if nothing is said at all.

Many franchisors maintain voluntary advisory boards, comprised of franchisees. These groups are the mouthpieces of the owners, expressing opinions and desires on products, services and promotional activity. If these outlets exists within a franchise then they can serve as a springboard for the individual owner to bring concerns to the attention of the franchising organization either by bringing those concerns to the advisory board or by even volunteering to serve him or herself. Again, speaking out is the best way to make sure that your needs as an owner are being met? Remember, it's your business. Make your franchisor work for you in the interest of growing and developing the brand in a mutually beneficial manner.