Basic Information about Franchising

“Franchising means working for yourself, but not by yourself.” This has been the most popular quote to note when it comes to franchising. Franchising became the combination of sole proprietorship and corporation. The business scheme involves two individuals doing business under a certain agreement. They are the Franchisor and the franchisee.

business franchising

The franchisor owns an established business and wants to expand. Instead of opening another store wherein all efforts will be doubled, he chose to offer his trademark and operating system to someone else who’s willing to do it and in this case, the franchisee. The latter will run the business using the franchisor’s trademark and operating system and will follow some guidelines set by the franchisor. The franchised business should operate exactly like the parent company and if any case the franchisor discovered something inappropriate in the operation that could ruin his reputation; he has the right to revoke the agreement.

The relationship between the franchisee and the franchisor is similar to that of a child and parent respectively. The parent will guide the child to become like the parent. However, in the case of franchising, the franchisee who happens to be the child is also a businessman who aims for profit. He should work hard for the business to reap sales in order to have the return of investment as soon as possible. Implementing business strategies and advertisements is the responsibility of the franchisee. The franchisor will just guide the other party on how things are going but the success of the business is still dependent on the management of the franchisee. The franchisor was able to make the company succeed in his own ways and same is expected to the franchisee. If in any case the franchisee will fail, the consequences and losses would be faced by him alone.

Image Credit:
Adamr – Free Digitasl Photos.Net

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