Franchisor vs franchisee: who does what at a branch

Franchisor vs franchisee comes down to who owns the system and who runs the branch. The franchisor is the company that owns the brand, the recipes or services, and the way of running the shop. The franchisee is the person or company that pays the franchisor for the right to open a branch under that brand and runs it day to day.

Take a milk tea brand with 40 branches. Head office created the drinks, chose the suppliers, designed the counter and wrote the manual: that is the franchisor. A couple who own two of those branches in Laguna, hire the crew and open the shutters at 10am: they are franchisees. Customers see the same logo at both. Behind it, money and responsibility are split between the two.

The Philippine Franchise Association puts it this way: the franchisor establishes the trademark and a business system, and the franchisee pays a royalty, and often an initial fee, to operate under them. For the bigger picture, start with what franchising is and how it works.

A franchisee is an independent business owner who runs a branch under someone else's brand. The word ends in -ee like employee, but a franchisee is not an employee. They invest their own money, carry their own staff and bills, and keep the branch's profit after fees.

A few words get mixed up with it:

• Franchisee vs franchise: the franchise is the right, or the business you bought. The franchisee is you.
• Franchisee vs franchise owner: usually the same person. Some brands say franchise partner or franchise owner because it sounds less formal.
• Franchisee vs store manager: the franchisee owns the branch; the store manager runs it day to day and may be employed by the franchisee. Many franchisees with one branch are also its manager. See store manager duties.
• Franchisee vs licensee: a licensee usually gets the right to use a name or product only. A franchisee gets the whole system, along with its rules.
• Multi-unit franchisee: one owner running several branches, sometimes of several brands.

The franchise agreement decides the details, and brands differ. This is the usual split in Philippine franchises. Use it as a list of topics to check in your own agreement, not as a promise of what yours says.

• Brand and trademark: franchisor owns and protects them. Franchisee uses them exactly as the brand manual says.
• Products and menu: franchisor develops them and sets the recipes. Franchisee makes them to standard and doesn't add items without approval.
• Suppliers: franchisor picks or approves them. Franchisee orders from the approved list.
• Site: franchisor sets the rules and approves the location. Franchisee finds it, signs the lease and pays the rent.
• Store build-out: franchisor provides the design. Franchisee pays for it.
• Training: franchisor trains the franchisee and the first crew. Franchisee trains new hires after that.
• Staff: franchisee hires, pays, schedules and manages them.
• Daily operations: franchisee runs them to the manual; franchisor audits, often through area managers or mystery shoppers.
• Prices: often set or recommended by the franchisor, so a customer pays the same everywhere.
• Brand-wide marketing: franchisor runs it, usually funded by a marketing fund that franchisees pay into.
• Local marketing: mostly the franchisee, within the brand's rules.
• The branch's Google profile and reviews: varies the most between brands. Settle it before signing (see below).
• Complaints and refunds: franchisee handles them at the counter; serious ones go to the franchisor.

There are two kinds of marketing in a franchise. Brand-wide marketing is the TV spot, the big social media campaign, the new-flavour launch. The franchisor runs it, usually paid from a marketing fund collected from every branch.

Local store marketing (LSM) is everything that brings people from the nearby offices, school or barangay into this particular branch. Think flyers, tie-ups with the building's tenants, a tarpaulin for the town fiesta, the branch's own Google profile. The PFA's 2026 Franchisee Summit, for example, had a session on local store marketing described as franchisee-driven.

Most brands want approval for anything carrying the logo, so ask what you can do on your own and what needs a sign-off. Our guide to local store marketing has a 30-day plan for one branch.

Many customers find a branch through Google Maps, so this question deserves a line in the agreement. Google's guidelines allow one profile per location, and all locations in the same country must use the same business name.

Each profile can have several people with access. Google's roles are owner and manager, with one primary owner; managers can reply to reviews but can't add or remove users. A common split is the franchisor as owner and the franchisee as manager, but some brands do the reverse. If someone else already owns the profile, you can request ownership, and the owner has 3 days to respond. Our guide to Google Business Profile for franchises covers the setups, business groups and what happens when a franchisee leaves.

There are three workable models. Whichever you pick, write it down; our review response guidelines include a one-page template a brand can hand every branch, and the free review reply tool drafts a reply you can edit.

• Head office answers every review. Consistent tone, but slower, and replies can miss local details the crew knows.
• Each branch answers its own, following a written guideline from the brand. Faster and more local, but quality varies.
• Split: the branch answers 4 and 5 star reviews within a day or two; anything 1 to 3 stars, or anything about food safety, injury, discrimination or a staff member, goes to head office first.

Bring this list to the franchisor and ask for the answers in writing. Then have a lawyer read the agreement itself.

• Which fees are one-time and which are recurring, and what each one pays for?
• What does the marketing fund pay for, and do franchisees see a report of how it was spent?
• What local marketing can I do on my own, and what needs approval?
• Who creates my branch's Google profile, who is the primary owner, and what role do I get?
• Who answers my branch's reviews, how fast, and who handles complaints that need a refund or replacement?
• Who keeps the hours, holiday hours and photos of my branch current?
• What happens to the profile and its reviews if I sell, move or close the branch?
• How often will the franchisor audit my branch, and what is on the checklist?