Get to Know What Franchising Means Franchising refers to giving permission to another business by the mother business to produce, sell or deal in products similar to those of the mother company for an agreed period. The franchise could be simply compared to leasing or renting for an opportunity. Now from the whole concept of franchising, we get the franchisor and the franchisee; where the franchisor is the mother company that gives the right of operation to the franchise. To be allowed to operate the franchise is supposed to pay the franchisor specific amount. To be given the green light to operate the franchise is supposed to meet certain financial commitments. The payments that the franchise is supposed to pay the franchisor include the trademark’s royalty, the cost of training and advice services, and a percentage of each unit sold. The success of the franchisor depends on the success of the franchise. The franchisee’s period of operation is limited to the franchise agreement. Every time the franchise agreement expires it could be renewed. The franchisee is also required to operate in a given location. The role of protecting the trademark belongs to the franchisor while the obligation of carrying out the services that the trademark entails belongs to the franchise.
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Franchisees could exist as single or multi-franchisee. Single franchisee operates only one unit while a multi-franchisee operates more than one unit.
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The franchisor and the franchisee must agree on what number of units to be franchised, the time frame for their operation and the geographical area from where each and every unit will operate from. A unique agreement for each unit of the franchise is set. The popularity of multi-franchise is very high. Multi-franchise has had much influence over the many years they have been in existence. Multi-franchise requires high levels of investments. The good thing about them is that they provide a high level of stability. Since the multi-franchises operate in diverse locations their level of success is very high. Single franchises may not be as successful as the multi-franchises. A single franchise might be disadvantaged since it operates from one location. The success of multi-franchises lies in their popularity. When the franchisors realizes there is huge potential in multi-franchises they encourage the multi-franchises to open more and more units than before. The other advantage with the multi-franchise is that when one unit seems not to be doing great, the other units may come in and help to revive them. Good researchers should be done to establish the viability of multi-franchises. Ready cash and other forms of investments are needed for the multi-franchise to thrive.