In order for franchises to have a favourable reputation within the franchising industry, it is important for franchisors to have an ethical framework in place.
Tried & Tested System
The business model needs to be tried and tested — in other words, it must be proven to work and be profitable. Franchisors should be able to display a successful prototypical franchise unit for prospective franchisees to visualize, understand and believe that the franchise concept is practical and still profit-feasible even after making franchise payments to the franchisor.
Ease Of Replicability
The business needs to possess operational systems and processes that can be taught to and performed by independent franchisees and their staff, regardless of location, in order to produce the same quality standards for customers. Which is why an operations manual is a key tool for any franchise system.
Accuracy Of Information
Any information disclosed to prospective franchisees must be clear, accurate and without vagueness. And especially with regards to finanical performance projections, which demonstrates sales estimations, should be realistic and relevant to the type of franchise unit (i.e. kiosk, full service restaurant, etc.) in discussion.
Fair Business Arrangement
While the franchise agreement is typically structured to protect the interests of the franchisor, it must be fair to all parties involved and implemented in accordance with local law or code of ethics.