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Everything you Need to Know about Franchising When a business gives permission to another business to operate in its products is what we call franchising. We could also say that franchising is 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. The franchisee is required to pay to the franchisor some money to be allowed to operate. To be given the green light to operate the franchise is supposed to meet certain financial commitments. The franchisor only allows the franchisee to operate only when trademark’s royalty, the cost of training and advisory services and agreement to pay a certain percentage of each unit sold are met. The success of the franchisor depends on the success of the franchise. The franchisee’s period of operation is limited to the franchise agreement. It is possible to renew the franchise agreement. The agreed location is where the franchise is supposed to operate. The franchisor protects the trademark while the franchise is charged with the obligation of carrying out the services which the trademark entails.
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The single franchise and multi-franchise are the two major types of franchises. Single franchisee operates only one unit while a multi-franchisee 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. Each unit of franchise has a unique agreement. The multi-franchise is very popular and they are in high numbers. The popularity of the multi-franchises has risen in the recent past. High levels of investments are required to set up multi-franchises. 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. The single franchise relies on just one location which might disadvantage it. The reason why multi-franchises have enjoyed exponential growth is that of popularity growth. The franchisors may encourage the multi-franchises when they see huge potential in them. 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. Having ready cash is a prerequisite for the multi-franchise to thrive.