Does a franchisor provide franchisees with sales leads?

Every franchise is different and there is a very broad range of franchises out there. The great majority of franchises do require franchisees to sell and very few franchise businesses can simply rely on leads being provided to them.  Within that simple statement there are a number of variations.

Some franchise agreements envisage that the franchisor will obtain national or regional accounts which will be contracts which the franchisor enters into with a customer and which one or more franchisees will be required to perform – at the rates agreed by the franchisor with the customer. Usually these contracts are less profitable for franchisees than contracts that they obtain themselves – the reason for this is that large customers will generally seek to obtain better terms than smaller customers. The danger for the franchisor of this approach is that franchisees become accustomed to the work simply flowing at albeit a reduced margin and, as a result, become “too comfortable” simply relying on what the franchisor does.

Other franchises such as parcels delivery franchises simply require franchisees to perform services for the franchisor in respect of contracts entered into by the franchisor but many do not consider these arrangements to be true franchises.

Usually franchisees have to find their own customers and that is why franchisors appoint franchisees because franchisees are local, will know their local market and it is much easier for them to find customers in their allocated territory than it is for the franchisor.