Roles and obligations of the franchisor
Financial assistance- our requirements
The accreditation process

One of the key factors influencing a company's decision to operate in the franchise sector is usually financial viability. There may be a number of other motivators but the importance of carefully and realistically assessing financial viability is often understated.

To expand your business through franchising could be the best decision you ever make. It could also be a recipe for disaster. Before embarking on this course of action, or in hindsight with a view to improving an existing operation, consider the following questions:

• Has my business been profitable over a reasonable period?
• Does my business have an element of uniqueness?
• Is my trademark well known and respected?
• Will it suit my temperament to build, motivate and coax franchisees rather than issue orders to staff?
• Is the operation of my business relatively simple, and can I train others within a reasonable time to duplicate my business success?
• Is the profitability of my business predictable?
• Are systems and procedures in place and represented in or capable of being represented in an operating manual?
• Do I have the financial resources to nurture the franchise venture during its start-up phase?
• Am I prepared to build and enhance the business on a continuous basis to ensure that my franchisees continue to receive value in exchange for their initial and on-going payments?

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Roles and obligations of the franchisor

Reading and understanding a standard franchise agreement will give you a legal outline of the roles and obligations of the franchisor. There needs to be a reasonable balance between what is expected of the franchisor and the franchisee.

Ultimately, it is the obligation of the franchisor to anticipate and prepare for what will happen tomorrow. With this in mind, here are a few of the many possible roles and obligations of the franchisor:

• To establish, maintain and protect any copyrights, goodwill, trade dress and trademarks. Trade secrets and know-how required or used within the franchise operation
• Provide full and comprehensive support to the new franchisee in respect of the establishment of the new outlet, which should include technical assistance, know-how and advice regarding layout and equipment required
• Make the benefit of the franchisor's know- how and experience on the operation available to the franchisee
• Train the franchisee and staff in the operation of the business at a level sufficient to ensure they are adequately equipped to manage the operation efficiently.
• Maintain vigilant control over all franchisees' operations to ensure standards are maintained and the interests of all franchisees are protected in terms of target market perception
• Provide ongoing support to all franchisees regarding the operation of the franchise, including troubleshooting, financial analysis and costing.

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Financial assistance- our requirements

In undertaking an assessment of an application for the financing of a franchisor's operation, we will need to satisfy our requirements in the following main areas

• Does the franchise have an existing reputation in the market place that may justify the sale of outlets on a franchise basis?
• Has the development of the franchise concept been adequately funded from the owner's persona or internal equity?
• Is the industry in which the franchise operates considered to be high-risk and what steps have been taken to minimise the risk to both the franchisor and potential franchisees?
• Have the systems and procedures been fine-tuned through the operation of company-owned outlets and will the franchisor continue to show their commitment by retaining a number of company-owned outlets?
• Does the franchisor have the infrastructure to be able to perform their role at a consistently high level, for example, site selection, analysis and development, training, viability assessment and field support?
• Has the franchisor registered or do they intend registering with the Franchise Association of Southern Africa (FASA)?
• Does the franchisor have an acceptable Disclosure Document, along the lines of that prescribed by FASA?
• Are there any clauses in the Franchise Agreement that are onerous to us?

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The accreditation process

It is important for both new and existing franchisors to apply to us for accreditation and open the channels for processing applications for finance by potential franchisees.

The accreditation process considers the franchise opportunity from the franchisor's perspective and includes a detailed analysis of the items discussed above. The main object of accreditation is to enable the smooth processing of applications for finance for future franchisees by opening a comprehensive file on the franchisor, which is made available to our various points of representation. This eliminates the need for repeat requests for information that has already been provided to us.

Accreditation is granted on an annual basis and therefore requires a review of the franchisor's position and our assessment of it. Accreditation is the first major step in formulating a sound business relationship between the franchisor, ourselves and, ultimately, the franchisee.

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