Franchising is a partnership between a company (the franchisor) and an individual or in some cases another company (the franchisee) for the purpose of distributing a product or service in a given market.
A franchise partnership is designed to be mutually beneficial both for the franchisor and for the franchisee.
For the Franchisor: Using the franchise model allow companies to expand rapidly into new markets at a lower cost and risk than through company-owned and operated unit expansion. This is because much of the set-up cost is absorbed by the franchise fee paid by the franchisee upon entering into the franchise agreement.
In addition, having a locally-owned franchise unit is advantageous as the franchisee generally knows the local market conditions and can adapt more readily than remote management. Finally, a franchisee shares in the success and profits of the franchisor making them often more highly motivated for success than a standard employee manager.
For the Individual Franchisee: Entering into a franchise agreement has a number of benefits for budding entrepreneurs. Including the following:
For the Company Franchisee: Entering into a franchise agreement can allow an existing business to expand upon and enhance their current market offering, align themselves with a more established or niche brand and benefit from the expertise of the franchisor's business.
Give and Take: Like all healthy relationships a franchise partnership is governed by the principles of give and take. Below is a list of some of the elements that may be included in this give and take relationship.
FRANCHISEE TO FRANCHISOR
FRANCHISOR TO FRANCHISEE
Every Franchise is Different
While in certain countries such as the U.S.A. franchising is regulated meaning a more uniform approach, in many others including India, it is not. In these cases local franchise associations often implement a code of practice amongst their members. Either way, every franchise partnership is unique. Some may include all the 'give and take' elements listed, others might only include a couple or offer variations upon these.
It is recommended to examine each franchise opportunity individually, take nothing for granted and ask as many questions as you can before proceeding further with any opportunity. When you are close to the point of reaching a franchise agreement be sure to engage legal and financial advisors to see you safely through to the other side.
Above all be BRAVE, be BOLD and BE YOUR OWN BOSS!
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