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Interesting Research on Franchises – Things You Probably Never Knew

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. 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. To be given the green light to operate the franchise is supposed to meet certain financial commitments. 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 fate of the franchisor heavily depends on the franchisee success or failure. 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 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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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. Every unit in a franchise agreement carries with it a unique agreement which is different from all others.

The popularity of multi-franchise is very high. 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. Since the multi-franchises operate in diverse locations their level of success is very high. One single franchise may not be as successful as multi-franchise. 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.

The other units of a multi-franchise might come into action to help a unit that might be lagging behind regarding performance.

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. Ready cash and other forms of investments are needed for the multi-franchise to thrive.