Joel Libava
Do you know how important franchise rules are?
I hope so.
Because your knowledge and acceptance of them will help you a lot.
I’ll explain.
The Reason For Franchise Rules
Why is the franchise model based on rules?
Because brand and experience uniformity are key to a successful franchise business concept.
For example, if you’re taking your family on vacation, and you’re looking for a place to grab a quick lunch, there’s a good chance you’re going to steer toward a place you’re familiar with. Can you think of a couple places? Exactly.
And when you visit a fast food chain like McDonald’s, you already know ahead of time what the menu has on it, how much you’re going to spend.
As a matter of fact, in the case of McDonald’s, your mind is going to paint a picture of what the restaurant is going to look like, along with how your food is going to look like and taste like.
Finally, in a perfect world, your expectations will be met. And that’s franchising at its best.
You Need To Follow Franchise Rules
If you become the owner of a franchise, you’ll need to follow the rules your franchisor dictates (in writing). And there are lots of them! Here are just two:
“As a franchisee, you must use any and all signage required by the franchisor. That means in-store signage along with outdoor signage containing the brand’s colors and their logo.”
That means you can’t add your own colors to your store. Again, it’s about uniformity.
“You’ll only be able to sell products and/or services that are stated in the contract. For example, if you buy a dry-cleaning franchise, you aren’t permitted to sell donuts and coffee to your customers.”
Makes sense, right?
Can you imagine walking into a Pet Supplies Plus franchise and being offered pizza and wings?
Would you like to see some of the other rules imposed on you if you become a franchisee? I thought so.
I share what they are in an article I wrote for the U.S. Small Business Administration. Here
Rules For Franchisors
In addition, franchisors have rules to follow. These rules are administered by the Federal Trade Commission. And there are lots of them.
“The Franchise Rule gives prospective purchasers of franchises the material information they need in order to weigh the risks and benefits of such an investment. The Rule requires franchisors to provide all potential franchisees with a disclosure document containing 23 specific items of information about the offered franchise, its officers, and other franchisees.”
Does that mean that every franchisor follows them to the “T?”
In almost every case, yes.
But not this one.
Note: if you feel a franchisor failed to disclose something in their document, or used deceptive practices, drop me an email. Joel at thefranchiseking dot com. I’ll be happy to report it to the FTC.
Rules, Schmules
I urge you to take franchise rules seriously.
If you’re a franchisor, hire an ethical, experienced franchise attorney.
If you’re a would-be franchisee, you’ll need to follow the rules imposed upon you by the franchisor.
Are you comfortable with that?
100%?
I hope so.
Finally, if you want to make sure you’re right for franchising, including the all-important rule-following aspect of owning one, take my Free Franchise Quiz.
