FOCO Business Model

What is the FOCO Business Model?

The FOCO also know as Franchise Owned, Company Operated is a business model where it represents a hybrid approach to franchising. This model is a kind of business strategy where the brand provides their Trademark to the franchisee. In the exchange, the Franchisee give the amount to the Franchisor. Where the franchisor provides their supports and guidance to the franchisee. This model is beneficial for the Franchisor as well as the Franchisee where Franchisor can expand its reach while the Franchisee can use the Brand’s reputation. 

Functions and Responsibilities of the Franchisor and Franchisee under the FOCO Model

For expanding the business its important for both the parties to do their works and responsibilities towards each other.

Franchisor

The Franchisor the main business owner who gives the authority to use their brand names to the franchisee in exchange of the prescribe fees and the loyalties. As a Franchisor the main and important responsibilities is to support and assist the franchisee to expand the business. 

The Franchisor Responsibilities of franchisor are-

• Operational Management: The franchisor must handle day- to -day operations of the business. Which includes the appointing and trained the staff, marketing, and other overall management of the business. 

• Maintaining Standards: To ensure that the brands standard cannot down is also the responsibility of the Franchisor. Following protocols, ensures a consistent customer experience is the responsibility of the Franchisor.

• Support and Training: Ensuring brand’s operations and values , Franchisor is responsible to provides supports and training to the staff. 

• Financial Management- The Franchisor is responsible to lookout the financial management and expense control , ensuring profitability and efficiency.

Franchisee 

Franchisee (who pays the amount to expand their business by using that name of brands and this money is fixed between Franchisor & Franchisee) Franchisees must obliged to follow the rules and practices put forth by Franchisor in order to conduct business on right path.

• Financial Investments: Above all, the Franchisee is expected to give the necessary financial investments to his/her respective franchisor.

• Asset Ownership: As the Franchisee acquired the asset ownership then it is the responsibility that to expand the business so that the brand also come in light. 

• Reporting and Monitoring: As Franchisee have the Brand name then it is also the responsibility of the Franchisee to run the business according to the set guidelines. It is the responsibility to report regularly to the Franchisor.

Role of Franchise Agreement in the FOCO Model

Agreement In Business, it is mandatory to have anything in an agreement which will show the responsibilities and rights of both parties along with obligations. The terms and conditions of the Franchise agreement in FOCO Business are important for the registration as it contains all rules, responsibilities, rights areas; duties & obligations that exist between both sides (the Franchisor & The franchisee)

• In agreement it is necessary to includes the points regarding the initial franchise fee, royalties towards the Franchisor and other financial commitments.

• The role of Franchisors in the business, in what extends the Franchisors can interfere and the franchisee’s role in oversight and financial guidance.

• The franchisor’s specified the performance metrics and all the standards to the franchisee regarding the business

• If there is disputes arise between the Franchisor and the Franchisee then the mechanism for resolving the disputes. 

• Duration of the franchise agreement and the conditions under which the agreement can be terminated.

Advantages of FOCO Business Model

• Franchisee have the advantages of the expertise of the Franchisor’s for managing and expanding the business.

• Franchisor’s have the benefits to enhance their brand reputation in market.

• As day- to -day  management of the business is on the Frnachisor’s then it is beneficial for the Franchisee to focus on their investments returns.

• As the Franchisors business is already a branded name so FOCO business model can facilitate rapid expansion.

Disadvantages of the FOCO Model

• Limited Control: As the more operational power is in the hand of Franchisor’s therefore the Franchisee have the limited control over daily operations. 

• Full Dependency on Franchisor: One more disadvantage of the FOCO Model is that the success of the Franchise heavily depends on the franchisor’s ability.

• Agreement Complexity: The franchise agreement may be complex, which required proper understanding and legal scrutiny.

Conclusion

The FOCO Model have the unique approach to the franchising and company operation. As the FOCO Business model is beneficial for both the Franchisor and the Franchisee where Franchisor can expand the name of their brand name while maintaining a high degree and the Franchisee with the opportunity to expand their business with the help of the Franchisor’s brand in exchange of certain fixed amounts. But for this it is necessary for both the parties to clearly understand their roles agreements between them for successful partnership.

Author:

Akansha Upadhyay
Rajasthan
B.A.LL.B 4th year student of Banasthali Vidyapith, Rajasthan