Possibly one of the best known business logos in the world would be the McDonalds " Golden Arches ". They can be found in just about every country on planet earth, and this form of " franchising " is spreading into all avenues of trading because of the obvious advantages it delivers .
" Franchising " is a way of doing business that has expanded into so many areas of the business world that it now represents a significant proportion of paid employment figures. Often this is a small number of permanent employees and a floating population of " casuals " who supply the numbers to cater for peak demand periods.
Franchising also offers a low risk way for entrepreneurs to establish their own business by taking up a franchise with a nationally known brand name. By paying a fee they get to use the brand logo and the national company provides the plan for the store layout, signage, uniforms for staff and even dictates the actual stock on offer. Usually franchise owners and their staff are trained by the logo owner so that the chain of shops presents a degree of uniformity to their customers.
Some franchise arrangements require the franchise holder to provide an approved premise while others extract rent for a company owned venue. The appeal for most franchise holders is that this proven trading formulae virtually guarantees that the venture will be successful. Over recent decades franchising has spread from fast food chains to all manner of merchandising and now encompasses everything from lawn mowing and gardening to the marketing of petrol.
Unfortunately, it now appears that many franchising plans deliver skimpy profits. In some cases, the achievement of an operating profit relies on keeping staff payrolls below what is legally required by law and some operators have resorted to what is called " the black economy ". The employer tampers with wage receipts to lower the hours the employee is supposed to have worked and the pay received is sub-standard, In other cases, pay is " cash in hand " and without record, but seriously below the rate per hour stipulated by law. Under employment ensures that many desperate people are forced to accept such arrangements.
In the past, the big holding companies have been able to shrug their shoulders and ignore this problem because employee pay is a responsibility of the franchise holder. Some franchise holders in the petrol retailing industry claim that the franchise arrangement deliberately short changes them into using unpaid family members or gouging paid staff to go past the break even stage of profitability.
Recent public scandals involving national brand name franchise stores cheating on employee pay in ways that suggest that this is becoming part of the logo operating procedures has induced the government to prepare legislation to make the logo holder equally responsible with its franchisee for pay fraud.
The business world warns that this will discourage investment in franchise networks. It will certainly throw the spotlight on franchise offers which are unrealistic on returns to the operator unless pay levels are maintained below legal levels. The entire franchise system will need to be reworked to ensure the offer to new franchise applicants can be examined by accountants with the expectation that it is commercially feasible.
The franchise industry has become so integral in the business world that a tightening of control is long overdue !
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