Let’s debate to agree franchise terminology

Let’s debate to agree franchise terminology


Who on earth started the trend of calling franchisees ‘franchise owners’? Similarly, what’s with the term ‘master franchisor’ when describing the foreign party to an international franchise agreement? – By Brian Duckett, The Franchising Centre.

I have even seen businesses refer to ‘divisional franchisors’; when their franchise is divided into various technical functions. They may head up the business in their own country or within their own speciality, but they are a master franchisee or a divisional franchisee, they are not a franchisor.

There is only one franchise owner, the franchisor, and that is the company that owns the name and developed the system that its franchisees then operate.

It was Moshe Gerstenhaber, the founder of Kall Kwik, which was itself a master franchisee of the U.S. Kwik Kopy franchise, who first described franchising as ‘system leasing’. Such a name succinctly describes the process whereby the franchisor grants the rights to a franchisee, to operate a proven system under an established brand name, from an agreed location or in an agreed territory.

The grant, or lease, of those rights remains in place for a specified term but only if the franchisee continues to operate by the rules and within the standards. If the franchisee, be they master, divisional, sub or unit, stops operating properly they lose those rights and the lease is terminated.

Thus it is clear that the franchisor owns and controls the system while the franchisees own the local businesses which they operate.

One franchisor told me: “But they feel better if we call them franchise owners”. Yet another said: “We prefer to call them franchise partners because we think that better describes the relationship”.

Saints preserve us, they are not ‘partners’ either. They run their business, you run yours. You may have a shared objective to build a brand together but you are not legal partners. They are franchisees, and you are the franchisor.

Of course the franchisees as a group are crucial to the successful operation and growth of any system but they are only successful because they follow that system.

That is why they decided to become a franchisee, rather than re-invent the wheel and become an independent start-up.

As important as they are as a group, no individual should be encouraged to get above themselves and think they are more important than any or all of their peers, or indeed the franchisor.

This brings me to another common misnomer which is becoming particularly prevalent on social media, especially LinkedIn.

If you were to search for people describing themselves as the managing director of a particular franchise, my guess is that you would come up with  several search results.

Why?, because franchisees are now calling themselves managing director of the said franchise brand, whereas they are really the managing director of the company that operates the brand in their territory.

When I’m looking to do business with an established  franchised network my intention is to be talking to the managing director of the franchised network, not those who are franchisees.

If you disagree, then please feel free to contact the editor of this publication who will no doubt be willing to let the conversation develop.

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