Chapter 4:
Franchisor Management:
Organization and Administrative
Policy
Franchisor development
To properly develop the franchise
system, the franchisor must create
three levels of administration,
Franchisor development
•Strategic development – focused
around the vision of the franchisor,
plus the products and services that
the franchisor will provide.
Franchisor development
Administrative development
Ø is centered around the organization
of the business, necessary finances
and required human resources.
Franchisor development
Operations development
Ø it concerns about the functions and
operations of the headquarters
organization.
Ø This includes advertising, marketing,
pricing etc.
The interdependence between Franchisor and
franchisee
• The most important ingredient for success of a franchise systems is
the interdependence between franchisor and franchisee.
• The franchisor develops the profitable way to produce, sell, or
distribute a product, and must monitor or oversee every unit within
the franchise system.
The interdependence between Franchisor and
franchisee
• The franchisee, on the other hand, desires a business venture that can
be managed effectively and profitably
• The franchisee expects to receive an accepted business name, a
product to sell or distribute that has a positive image, and an ongoing
training and other assistance.
Six major organizational developmental
tasks
1. Identifying and defining the market niche
2. Designing the product and service to meet the wants, needs
and expectations of the targeted customer group.
3. Developing the policies and plans for controlling the
anticipated growth.
Six major organizational developmental
tasks
4. Acquiring the financial and human
resources necessary to implement the
planned course of development of the
franchise system.
5. Establishing an appropriate monitoring and
control procedures to ensure consistency
in products and services offered to the
public.
6. Develop an acceptable organizational
culture.
The franchisor should be well versed in the art of managing. This
includes,
Ø Planning
Ø Organizing
Ø Directing
Ø Controlling
As this is of critical importance in the relationship between
franchisor and the franchisee.
Planning
Planning concerns the following,
• Determining the overall goal, mission, and objectives of the franchise.
• Formulating policies, plans of action, and procedures for attaining the
objectives of the franchise organization
Organizing
• Organizing is the coordination of human, financial, and physical
resources deemed necessary to reach the objectives set forth in
the planning phase.
• Activities include identifying the jobs required to be performed,
and staffing each job with qualified people, determining how much
authority and responsibility each person should have as an
employee of the business.
Directing
• Giving orders/directives
• Supervising – is about the training and disciplining if required of
personnel employed in the franchise organisation.
• Leading – is meant to influence others to willingly provide effort and
cooperation in order to achieve the objectives of the organization.
• Motivating and communicating
Controlling
Controlling involves the determination of standards and methods of
evaluating performance against those standards to appraise operating
results.
E.g. appraisal of performance of subordinate managers.
