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A Good Explanation of Franchising When a business gives permission to another business to operate in its products is what we call franchising. Leasing or renting for a business opportunity is what entails franchising. 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. The franchisee is required to pay to the franchisor some money to be allowed to operate. The original company requires to be paid a commission of what the franchise sells. 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. When the franchise succeeds the franchisor also succeeds. The operation of the franchisee is limited. However the franchise agreement could be renewed every time it expires. 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 number of units to the franchise, the time frame for each unit and the area for each unit to operate from must be agreed. Each unit of franchise has a unique agreement. The multi-franchise is very popular and they are in high numbers. Multi-franchise has had much influence over the many years they have been in existence. To set up multi-franchises high levels of investments are required. The good thing about them is that they provide a high level of stability. The level of success of the multi-franchises 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. It is advisable for anyone who wants to carry out multi-franchising business to carry out a good research to establish if the area they want to set up these businesses is viable for business. For the multi-franchise to thrive it is advisable to have ready cash and other forms of investments.