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Get to Know What Franchising Means When a business gives permission to another business to operate in its products is what we call franchising. The franchise could be simply compared to 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. Trademark’s royalty, the cost of training and advisory services and a percentage of each unit sold are the three financial commitments that the franchisee must meet to be allowed to operate by the franchisor. The success of the franchisor depends on the success of the franchise. The franchise only last for a particular period. However the franchise agreement could be renewed every time it expires. The franchisee is also required to operate in a given 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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Two types of franchises exist- the single franchise and the multi-franchise. The difference between a single franchise and a multi-franchise is that a single franchise only operates one unit while a multi-franchise operates more than one unit.
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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 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. High level of stability is provided by the multi-franchises. The level of success of the multi-franchises is very high. Multi-franchises achieves more than original franchises. A single franchise might be disadvantaged since it operates from one location. The success of multi-franchises lies in their popularity. The franchisors may encourage the multi-franchises when they see huge potential in them. The other units of a multi-franchise might come into action to help a unit that might be lagging behind regarding performance. The viability of multi-franchises relies on good research. Having ready cash is a prerequisite for the multi-franchise to thrive.