The relationship between a franchisor and franchisee is an ongoing, contractual business relationship governed by a Franchise Agreement. This agreement defines the parameters of the relationship at the outset, so both parties know their rights and obligations to the franchisor-franchisee relationship.
The franchisor provides the franchisee with the operating system and support services to help grow the businesses. The franchisor also researches and develops new products and services, oversees brand advertising, and provides access to training and support.
The franchisee is an independent small business owner who leads the operations and management of their franchise location. As the legal employer of all staff, the franchisee is responsible for executing the day-to-day operations of the business, including employee hiring, training, scheduling, discipline, wages, payroll and remitting taxes, promotions, and terminations. The franchisee is also responsible a range of other business items including accounting, inventory management, rent, and remaining in compliance with all applicable laws.
Although joining a franchise certainly provides many advantages that come with being part of a recognized brand and established system, it does not guarantee success. The tens of thousands of Canadians who are successful in this model put a significant amount of time and hard work into their operations. They invest capital by opening their business, and continue to invest by modernizing, expanding, and opening new locations, all of which helps to create new employment and economic activity in the province. Franchisees also play an important role in their communities, developing relationships and supporting local initiatives and charities. In many ways, franchising has become the modern day ‘mom and pop’ business.