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 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. There are financial commitments that the franchisee must fulfill to be given the green light to operate. 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 franchise only last for a particular period. It is possible to renew the franchise agreement. The franchisee is also required to operate in a given location.
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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Franchisees could exist as single or multi-franchisee. 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 number of units to the franchise, the time frame for each unit and the area for each unit to operate from must be agreed. 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. Over the many years that the multi-franchises have been in existence they have gained popularity.
Multi-franchise requires high levels of investments. High level of stability is provided by the multi-franchises. They are also very likely to be successful since they operate in diverse locations. One single franchise may not be as successful as multi-franchise. One location that a single franchise operates from might disadvantage it.
The reason why multi-franchises have enjoyed exponential growth is that of popularity 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.
The other units of a multi-franchise might come into action to help a unit that might be lagging behind regarding performance.
Good researchers should be done to establish the viability of multi-franchises. Having ready cash is a prerequisite for the multi-franchise to thrive.