Smart Ideas: Businesses Revisited

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Get to Know What Franchising Means Franchising is simply put as giving of rights to operate in the same products as the mother company to another business in another geographical location, away from the original business. We could also say that franchising is leasing or renting for an opportunity. The Mother Company is now referred to as the franchisor while the business that gets the permission to operate is called the franchise. To be allowed to operate the franchise is supposed to pay the franchisor specific amount. 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 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. Multi-franchises are in high number nowadays due to their popularity. The popularity of the multi-franchises has risen in the recent past. High levels of investments are required to set up multi-franchises. 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. A single franchise might be disadvantaged since it operates from one location. Due to their popularity multi-franchises have witnessed exponential growth. The franchisors may encourage the multi-franchises when they see huge potential in them. The other advantage with the multi-franchise is that when one unit seems not to be doing great, the other units may come in and help to revive them. 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. For the multi-franchise to thrive it is advisable to have ready cash and other forms of investments.