Chapter 4

Franchisor Management:
Organization and Administrative Policy

PROFESSOR: MR. GLENN L. VILLAPANDO, MBA, LLB, PH.D. (C)

FRANCHISOR DEVELOPMENT

Strategic
development

Administrative
Development
Vision
Products
Operations
Services
Development
Organization
Finances
Human Advertising
Accounting
Resources Management
Production
Training
Distribution
Operations
Field Staff
Mktg. Research
Franchisor Development Process:
1. Strategic – focused on the vision of the franchisor. Plus
the products and services that the franchisor will provide.
2. Administrative – is centered around the organization of
the business, necessary finances and required human
resources.
3. Operations – This includes advertising, accounting,
pricing suggestions, marketing, production, training,
distribution, field staff and market research. The
franchisor must put together an organization that will
optimize the delivery of services to existing and
prospective franchisees.
FRANCHISE ENTREPRENEUR AS MANAGER
 Each franchisor is in same way an entrepreneur is to
some degree an innovator.
 Innovator – is seeking to find newer or better ways to
meet the customer needs.
 The typical reasons stated for business failure are lack
of business know-how and under-capitalization.
Set Priorities for Strategic Decisions:
 Build a franchise system and its infrastructure to
establish and maintain high performance at the home
office as well as corporate franchise locations.
 Be state of the art in products and services. –
continual product and services.
 Seek to gain and maintain a market share with
quality service customers.
 Continually improve processes and procedures
to ensure efficiency, standards of high quality,
and strong financial return.
 Develop a competent and committed workforce
and build a supportive environment.
 Position the franchise system for long term by
identifying threats to the franchise.
The Process Management:
1. Planning – Determining the overall goal, mission and
objectives, policies and actions, sales forecasts of the
franchise.
2. Organizing – It is the coordination of human, financial,
and physical resources deemed necessary to reach the
objectives. Organizational chart is useful in showing
these relationships.
Board of
Directors

Franchisor

• Director of
Director of Operations
franchise sales • Training
• Financial
MULTIUNIT FRANCHISING

 MULTIUNIT FRANCHISEE – is one who owns

and operates more than one franchise, often in
a urban area.
 MASTER FRANCHISEE – This individual has the
right to offer and sell franchised units, collect
fees, and provide services within a given
territory.
 Often this individual is not a franchisee, but an
agent who is directly responsible for selling
franchises in a given geographic area.
 AREA REPRESENTATIVE – This person is
generally an employee of the franchisor who
has the right to solicit for prospective
franchisees but does not have the right to
contract with franchisors.
 Also responsible for training franchisees,
providing periodic inspections, setting up
marketing and advertising schedules and
consulting.
 FRANCHISE BROKER – Is an independent party
who solicits prospective franchisees for the
franchisor. Generally work for several
franchisors.
3. Directing – It is used to achieve the franchise
organization’s objectives while building an organizational
climate conducive to encouraging superior performance.

Five major activities associated with directing:

1. Giving Directives

2. Supervising

3. Leading

4. Motivating

5. Communicating
4. Controlling – involves the determination of
standards and methods of evaluating
performance.

Types of appraisals:
1. Appraisal of performance of subordinate.

2. Appraisal of policies associated with franchise

recruitment, screening and selections.
3. Appraisal and analysis of financial
transactions.
Ten Commandments to a successful business:
1. Leadership
Four factors:
a, Have a sense of vision.
b. Be able to articulate vision.
c. An agenda to accomplish the vision.
d. Self-confidence to make it happen.
2. Staying with the business one understands.
 Create and expand upon business opportunities within
their spectrum of knowledge and experience.
3. Develop and maintain a unique market niche.
 Serving with high quality product and promote quality.
4. Keep in touch with customers.
 Going to franchised outlets and talking with customers.
5. Maintain management principles and fundamentals.
 People follow examples, so if the owner does something,
others will also follow.
6. Develop and maintain strong organization.
 Management should inform employees about how they
will be evaluated and rewarded.
7. Remain free from Government intervention.
8. Develop Fiscal responsibility.
 Franchisor must understand the financial picture and
their financial responsibilities.
9. Develop a strategic program.
 Identifying and explaining the vision of the franchise
system.
 Objectives and programs need to be reviewed at least
yearly to update and develop future strategy.
10. Pick Winners.
 Needs to have good, honest, hard-working people.

Motivation:
Jim Peterson has introduced five basic steps to motivation:
1. Improvement-oriented attitude – employee attitude are
important to customer satisfaction.
2. Measuring everyone’s performance

3. Evaluation
4. Feedback
 Honest feedback should flow between the franchisor
and employees.
5. Recognition.
 Important for employees that gives a feeling of self-
achievement and can help build self esteem.
THANK YOU AND HAVE A NICE WEEKEND!