Franchising awarding vs franchise sales

Franchising is an extremely successful business model based on the chain marketing system, wherein an entrepreneur or a group of individuals buy the license to start a branch of an established business.

This system allows a company to expand its business by giving entrepreneurs paid access to their business model.

In this business model, which is practiced around the world, the license buyer is called a franchisee while the seller is known as a franchisor.

The franchisee is granted the right to set up and run a new branch of the franchisor’s business of selling products or services as per the system fixed by the franchisor.   

Franchise Awarding is a celebration in which the franchisee finally becomes the owner of an outlet after signing all the legal franchise agreements underlining the terms and conditions with the franchisor.

This day is specially called the Discovery Day given that both the parties sit together and sign all the contracts and other documents relating to their franchise models. 

On Discovery Day, the franchisor will watch and observe whether the franchisee is meeting all the criteria necessary to successfully run its business model.

This is an important stage in the whole process. This point has the potential to make or break the deal. 

For, the Franchisor will try to make sure that the franchise meets all the standards are criteria that are required to meet. 

While it is a first outlet or a new business for the franchise, for franchisor with every franchise its reputation is at stake. With the reputation, future growth and development are linked.

Just like the financial standing of the franchise, equally important to judge for franchisor is his business acumen, commitment, dedication, and vision for the brand. 

The franchise wants to make an entry into the market, settle and grow the business. Similarly, the franchisor also wishes to grow its brand strength to strength after awarding each franchise. Both are co-dependent for future growth.

If the franchisee stands on his mark, the franchisor agreements are signed after some final discussions.

In some cases, due to a lack of stamina or dedication on the part of the franchisee, the discovery dates can be changed or turned down.

More often than not, the best franchisees are awarded the license based on the dedication and motivation shown by them for economic growth as it is crucial for the expansion strategy of the franchisor. There are some criteria necessary for awarding the franchise to specific entrepreneurs:

Motivation

Often the main criteria placed by numerous franchises is the motivation one has to display in order to increase the sales of certain brands functioning. 

Franchise must also be committed to growing by itself and not solely depend on franchisor at every step.

Suppose in a school franchising, the franchise will examine the level of dedication the entrepreneur has to overcome the failure rates and increase the reach of education to all. This adds immense value to the already established franchise. 

System operation 

A franchisee must be able to run the business with the fine-tuning of the brand without having room for any mistake or damage.

Franchisor can help in finding the right real estate, human resources, providing training and place systems in place.

But at the same time franchise must be equipped to run the show smoothly in the future.

No franchisor would ever like to see its brand take a hit due to the inability of one or two franchisees to successfully run the business.

The franchisee should have the capacity to overcome all the problem areas with or without the support of the franchisor and enhance the level of the franchise brand by opening more outlets. 

Benefits of investments.

Franchise opportunities are availed by the franchisee by investing a certain amount and generating more profits than the principal.

Then the franchisor will provide entrepreneur benefits to the franchisee as a reward for his hard work.

This is a classic case of a win-win situation. On one hand, it will help expand the franchise opportunities without a limit, on the other, the franchisee will be able to reap the benefits of his investments with his smart business acumen. 

Skills in management 

Another basic criteria that one needs to meet to open a franchise model business is quality management skills to expand the business more and more.

If the training personnel are not adequately supervised or trained, then the brand image would take a hit in no time.

Even the supervisors and trainers should also be aware of the latest practices, trends, technologies, and strategies in the market to always stay ahead in the game.

These are some of the basic criteria that every franchise looks out for before awarding the franchise benefits to a certain entrepreneur.   

There is a difference between awarding a franchise and franchise sales. The franchise sales don’t mean only closing the deal.

The original business is with the franchisor. But when he sells his brand and idea to someone else in return for a franchise fee, that’s called franchise selling.

It is also called the mutual evaluating process where both parties mutually evaluate each other for business.  

According to the current market position, the sales process must be tailored sensitively.

The whole process from submitting the supplication form to awarding the franchise takes a span of 5 to 12 weeks. By franchise sales, the franchisor usually finds out if you are suitable for them.

How is a franchise sale conducted?

• A franchisor appoints a franchise sales representative whose work is to look for potential entrepreneurs and sell the business model.
• Once he finds the correct franchisee for their brand, the procedure for sales is conducted. 
• The application form is given after a pre-discovery of the potential buyer.
• Under discovery, a lot of phone calls, webinars, and in-person meetings will be conducted to learn more about each other.
• Validation, where the disclosure documents will be validated and the buyers and sellers will visit different locations and sites for establishing the outlets.
• Closure, Now the legal documentations are done and the franchise is sold.
• After the sale is made, the sales representative is rewarded a generous commission for his work.
• Then the franchise brand is handed over to the buyer after a lot of scrutiny and gathering pieces of information.

The best franchisor and franchisee after a year of hard work is rewarded and accoladed for their journey together. 

For rewarding a heavy franchise, some criteria are taken into consideration:

• High expansion 

The franchisee who has accelerated the growth and reduced the losses of a particular franchise brand will be nominated for the award.

• Revenue

The amount of revenue generated by numerous franchises will be considered.

• Standard, ethics, and practice 

Franchise awards are generally handed over to the buyers who follow a certain standard and ethics thereby spreading love among mankind and prioritizing the welfare of the people more than his profits.

Some of the international awards given for the best Franchisor and Franchisee are:

1. Franchisor managers 
2. Business leadership
3. Customer service
4. Best entrepreneur
5. Franchise concept of the year
6. Innovation and technology.

Franchising offers a platform to make an individual independent enough to create a setup of his own. With the right decision and right opportunities, franchising can guarantee one not only success but also more coins in the pocket!

Dhinal Baxi is a founder of franchise Insider. As a founder, he has served hundreds of clients. His experience from the financial sector has helped them to achieve great success in the franchise world.