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Everything you Need to Know about Franchising Franchising is simply put as giving of rights to operate in the same products as the mother company to another business in another geographical location, away from the original business. We could also say that franchising is leasing or renting for an opportunity. The original company that gives the right to another business to deal in products similar to its products is called a franchisor while the business that request for permission to deal in the original companies products is called a franchise. The right to deal in products of the original company is not free of charge. There are financial commitments that the franchisee must fulfill to be given the green light to operate. 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 fate of the franchisor heavily depends on the franchisee success or failure. The franchisee’s period of operation is limited to the franchise agreement. It is possible to renew the franchise agreement. Every single franchise is supposed to operate at the agreed location. Every party to the franchising concept is charged with a different role; the franchisor is obligated with protecting the trademark while the franchisee is charged with the role of carrying out the services that entail the trademark.
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The single franchise and multi-franchise are the two major types of franchises. The franchise that operates more than one unit is called a multi-franchise while a franchise that operates one unit is called a single franchise.
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The franchisor and the multi-franchisee agree on what number of units to open and in what period and in a specific geographical region. A unique agreement for each unit of the franchise is set. The multi-franchise is very popular and they are in high numbers. Over the many years that the multi-franchises have been in existence they have gained popularity. To set up multi-franchises high levels of investments are required. Multi-franchises have high levels of stability which is their major advantage. The level of success of the multi-franchises is very high. Single franchises may not be as successful as the multi-franchises. One location that a single franchise operates from might disadvantage it. The reason why multi-franchises have enjoyed exponential growth is that of popularity growth. When the franchisors realizes there is huge potential in multi-franchises they encourage the multi-franchises to open more and more units than before. If it happens that one unit of the franchise fails the other franchise units may come into the equation and help it to rise to glory. The viability of multi-franchises relies on good research. Ready cash and other forms of investments are needed for the multi-franchise to thrive.