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Will a franchisor find customers for me?
Whether a franchisor will find customers for its franchisees will depend on the nature of the franchise business and how it attracts customers on a day-to-day basis. Some franchisors will provide potential customer lists to its franchisees, leaving the conversion of a potential customer into an actual one to the individual franchisee, while other franchise concepts require franchisees to rely more on advertising, good customer service and word of mouth to generate custom.In most cases, the franchisor will charge its franchisees an advertising or marketing fee and use these fees to carry out general marketing of the franchise network, rather than advertising for the benefit of one or specific franchisees. The advertising fee is often calculated as a percentage of the franchisee’s turnover, but the exact amount and frequency of payment will be specified in the franchise agreement. It is usual for the franchisor to hold this money in a separate account and make audited records, showing how the money has been applied, available to franchisees.If a franchisee chooses to do any marketing itself in addition to general marketing carried out by the franchisor, this will usually have to be pre-approved by the franchisor and will be at the franchisee’s own expense.
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