What is an Area Representative?
Probably created in response to sub-franchising, franchisors did not approve of the loss of power and sharing of royalties when they could easily have the entire cookie. The solution resulted in the arrangement known as the Franchise Area Representative.
The Area Representative pays a certain fee for the right to solicit prospective franchisees and to provide certain service to existing franchisees in a defined franchise territory. The Area Representative acts as a salesperson for the franchisor and once they find a new franchisee, the area representative does not enter into any contracts with the franchisee. They do not exercise any power unlike a Sub-franchisor. All the franchise agreements are entered into directly between the franchisor and the prospective franchisee. All payments by the prospective franchisee are made to the franchisor and no transaction takes place between the prospective franchisee and the Area Representative.
The reason why anyone would choose being an Area Representative is that they are paid a certain portion of the initial franchise fee of each new franchisee they solicit as compensation. Aside from the sales commission the area representative may get paid by the franchisor a portion of the royalties received for servicing franchisees. In some cases, franchisors will pay the area representatives a portion of the fee received from new franchisees in the reps’ territory even though the area representative may have had nothing to do with the screening or recommending that particular franchisee. However, all these and other contingencies- such as compensation for furnishing many of the pre-opening and on-going services to the franchisee- should be covered in the area representation agreement.
The area representative is most often a franchisee in the defined territory, owning one or multiple units. The area representative may own a unit completely or may have smaller ownership in several units.
5 Reasons Why Franchisees Fail
There are a number of reasons why a franchise can fail. Some of the reasons are based upon a lack of capital and/or particular skills necessary for a particular franchise to be successful. On the other hand, there may be factors that are out of the franchisee's control: a franchise program that has a lack of customer demand or a poor product, for example, can lead to failure despite the franchisee’s best efforts (another example of why the franchisee should have done their research before investing).
We'll Leave the Light On For You: Motel 6's Advertising Success
When Motel 6 conceived of the idea for a campaign in the mid-1980s, Bodett worked on NPR’s All Things Considered program. The Richards Group, a Dallas- based advertising agency, was hired by Motel 6 in 1985 and thought Bodett would be an excellent spokesman for the chain because of his warm and friendly vocal style. Hired in 1986, Bodett ad-libbed the line, “We’ll leave the light on for you”while in the recording studio for the first time and the slogan was both an instant and lasting success, staying with the chain for over 25 years and counting.
Top 5 Reasons to Join an Emerging Franchise
Investing in any franchise is a risk. You’re counting on franchisors for guidance; other franchisees for support and you’re investing a ton of money to build your business. Now add the risk factor of investing in an emerging franchise, a franchise with only a few franchisees. Does it add risk? Maybe, but there are far more benefits of investing in an emerging franchise that the little added risk, is a fleeting concern. Your voice is not only heard by the franchisors, but it’s also helping to make positive changes for future franchisees. Take a extremely large franchise such as, McDonalds or Hilton. Can you imagine a franchisee picking up the phone to call the President of the company to share an idea they had on how to make franchisees daily operations more efficient? In an emerging franchise, you are able to have a close relationship with the corporate team behind the concept and your ideas will be taken seriously. They believe in you as much as you believe in them. Here are five more reasons to join an emerging franchise: