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. The Mother Company is now referred to as the franchisor while the business that gets the permission to operate is called the 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. The payments that the franchise is supposed to pay the franchisor include the trademark’s royalty, the cost of training and advice services, and a percentage of each unit sold. When the franchise succeeds the franchisor also succeeds. The operation of the franchisee is limited. Every time the franchise agreement expires it could be renewed. The agreed location is where the franchise is supposed to operate. 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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Two types of franchises exist- the single franchise and the multi-franchise. The difference between a single franchise and a multi-franchise is that a single franchise only operates one unit while a multi-franchise 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. Multi-franchises are in high number nowadays due to their popularity. The popularity of the multi-franchises has risen in the recent past. Multi-franchise requires high levels of investments. Multi-franchises have high levels of stability which is their major advantage. The level of success of the multi-franchises 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. Due to their popularity multi-franchises have witnessed exponential growth. With the success of multi-franchises the franchisors might want to cash in on that huge success by encouraging the multi-franchises to open more units. 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. Good researchers should be done to establish the viability of multi-franchises. Ready cash and other forms of investments are needed for the multi-franchise to thrive.

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