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26 Business View Australia - April 2015
the success of a franchisee is greatly dependent
upon his ability to inculcate the standard operat-
ing procedures designed by the franchisor.
The business format franchise arrange-
ment has the following features:
• A customer is drawn to a retail establish-
ment by the assurance that she will expe-
rience a standardised product. To achieve
this end the franchisor has to ensure that
every facet of the franchisee’s establish-
ment is in sync with the stipulations laid
down. The agreement executed between
the franchisor and franchisee considers
this aspect sacrosanct and the entire ar-
rangement is based on the franchisee
meeting this requirement.
• The franchisee gains tremendously in that
he gets access to the brand recognition
enjoyed by the franchisor. The brand is an
asset built by the franchisor over a number
of years or even decades and it is the single
critical factor upon which the entire agree-
ment is based.
• When the franchisor gives the franchisee
permission to use his brand he will go to the
greatest lengths to ensure that its value is not
lessened by his franchisee’s actions. Towards
this end, the franchisor will monitor the ac-
tivities of the franchisee and work with him to
ensure their common success.
• This arrangement is an ideal one for entre-
preneurs who do not want to start a business
from scratch. A franchise arrangement will
give them an opportunity to start a commer-
cial enterprise which is based on a tried and
trusted model and has enjoyed success over
the years. Of course, the franchisee has to fol-
low the rules laid down in the agreement and