Approaches to the vendor-franchisee relationship
- Friday, April 22, 2011
Apart from the franchisor-franchisee partnership, one of the most important relationships an individual investing in a franchise opportunity can develop is with his or her vendors. These businesses will provide franchisees with everything they need to keep their business in operation, from paper and office supplies to any heavy equipment and software.
While independent business owners must find suppliers on their own, those running a franchise unit will have a head start when it comes to finding the lowest prices on products and signing contracts.
According to the Web site Franchising.com, there are a a number of vendor relationship situations franchisees may face when they are working with their franchise brand, and often it depends on the level of support a franchise system offers.
For example, in one scenario, a franchisor may secure all contracts and vendor relationships on behalf of their franchisees. This benefits the system and owners by being able to negotiate for bulk pricing and ensuring a uniform standard of quality for all products and services that franchisees will offer. However, for franchisees who want a bit more independence, this approach can seem a bit "heavy-handed," the source notes.
Another approach franchisors may take is a more entrepreneurial one that allows their unit owners to do their own research and build their own relationships with vendors. "This strategy gives the franchisee more control over his business, but does require more of their management and oversight as time goes on. Nevertheless, sometimes 'buying local' offers more intimate relationships and more cost-effective pricing," Franchising.com explains.
Lastly, some franchises require their franchisees to choose among a number of pre-approved vendors in certain areas of operations, while allowing them to select their own suppliers in other areas.
While equipment and software may be obvious choices for investment, franchisees will need to consider services such as accounting, landscaping and legal.
"Perhaps you need an attorney to look after various issues related to growth and expansion, for example. You may need someone to handle onsite maintenance and repairs. You may need someone to take care of the landscaping needs," the Web site explains.
However, the most important aspect of this is to ensure that franchisees are working with the best possible vendors and building beneficial relationships.
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