Every business operation that's ever manufactured or sold a widget has relied on vendors. The people and companies that supply everything from paper and office supplies to mushrooms and cheese - and everything in between - are an integral part of a successful business operation.
Independent businesses are left to fend for themselves when it comes to finding vendors and suppliers. They must conduct research, identify suppliers, compare pricing and products and sign contracts. In franchising, however, things can be a little different.
Depending on the franchise brand you team up with and their contractual policies, you may face a number of vendor relationship scenarios as you enter the franchising business.
Some franchise brands work diligently to secure all vendor relationships on behalf of their franchisees. This strategy provides broad-reaching control and allows the franchisor to negotiate and renegotiate all contracts for products and services (think bulk pricing). It also ensures the standard of quality of products and services ultimately delivered by all of its franchisees. For all of its strengths, this vendor strategy can be viewed as heavy-handed by some franchisees who might prefer to "do their own" shopping for vendors they'd like to team up with.
Still other franchise brands embrace a more entrepreneurial approach and allow their franchisees to do their own research and find vendors they think can offer the best products and services. Of course, franchisor standards are still in place and must be met by all 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.
Finally, there are franchise brands that require franchisees to use franchisor-selected or approved vendors in some areas of the business operations, while allowing franchisees to choose their own vendors in other areas. Regardless of the vendor strategy, franchisees and franchisors should always be committed to working with the best vendors around.
The type of franchise brand and concept will dictate what kind of vendor partners are necessary to carry on business on a daily basis. For example, a fast food franchise will need such things as cooking equipment, fresh food and ingredients, and uniforms. While a print shop would need all kinds of paper, ink, machines, and related office supplies.
But consider that beyond the basic essentials for everyday operations could be other additional vendor opportunities such as accounting, bookkeeping, and payroll services. 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. There are many business vendor relationships that must be established and maintained in order to keep a franchise business operating at maximum capacity.
Developing vendor relationships can be complicated and time-consuming. Next time we'll look at some keys to finding good vendors, negotiating fair contracts, and establishing and keeping strong relationships.
23.7: Franchisee Perspectives on Employee Retention
24.2: Finding Good Vendors