Franchisor Controls: What You Need To Know about the Rules of Being a Franchisee

When deciding to enter into a franchise agreement with a brand, a franchisee is investing in a proven model and system where there are many benefits including brand recognition from consumers, often a built-in customer base, assistance from the corporate team on opening a successful location and less risk and more profit. However, with all the attractive traits of the franchise model that encourage motivated entrepreneurs to pursue their business aspirations backed by a team of professionals, they should also understand the dynamic of the franchisor-franchisee relationship and what they can and cannot do.

Bob McQuillan, founder and CEO of Avignon Consulting and partner at Body20, says that anyone pursuing franchising should realize that they are buying into a brand’s system and its services and products and that the model is there for them to follow in order to be successful. 

“Franchise controls are basically guidelines that are set forth by the franchisor in the franchise agreement,” said McQuillan “The franchisee really needs to understand what their obligations are and the guidelines that the franchisor has in place, because that's going to be how they navigate their new business.” 

Elaborating on some major aspects of a brand that cannot be changed by its franchisees, McQuillan explains that a franchise has a duty to protect its trademark and brand — and this includes everything from the logo to store design to the quality of the products or services sold to how the business operates day-to-day. The franchisee is an entrepreneur and owns their own business in the sense that the location and territory are theirs, but they still have to operate within the brand’s guidelines. 

“Franchisees shouldn’t strive to reinvent the wheel,” said McQuillan. “Franchisors spend a great deal of money and time protecting the brand and enlisting attorneys a lot of money to draft franchise agreements. It's a pretty strong and hard fast rule that once these brands have the specific nails down and rules in place, they don't want you changing anything.”

While the rules and guidelines for each franchise are different, McQuillan advises prospective franchisees to look closely at the FDD and see what their obligations are before signing the franchise agreement to avoid any issues down the road. 

McQuillan further mentions that if someone doesn’t comply within the franchisor controls set forth, the brand can actually start de-franchising the individual. In order to avoid this, he advises franchisees to do their research and speak with the top operators in the brand’s system to understand their day-to-day life, as well as to consult a franchise attorney when reading the legal terms of the brand to gain peace of mind.

“Pick three or four people performing at the top level with the brand and have open, honest conversations with them,” McQuillan said. “Because whatever those top performers are doing, they are following the practices set forth in the system and thriving because of it.”