Franchisors And Franchisees
Are you planning to start a business? You’ve probably heard about franchising being a good direction to go. Franchising lets you start your business without having to go through the usual demands of putting something up from scratch. But it’s still not all that easy, though. You also have to brush up on things that are important as you begin a venture as a franchisee. For example, one of the most important things you must know is the value of the relationship between a franchisor and a franchisee. This is basically how a franchising business is likely to fail or not. When you have a good relationship with your franchisor, things usually just fall into place. But to know what makes this relationship a good one, you have to know the basic roles of each.
A franchisor is someone who has developed a certain business system and a set of strategies to run it. This person is selling franchisees the right use this system but not the business itself. The franchisor also retains the upper hand in terms of how to market the brand or business name and how to geographically distribute franchising outlets so there is enough share of the market per area. For example, you are not likely to find a certain outlet within a certain distance limit. This is something the franchisor determines and franchisees are to follow this rule.
A franchisee is someone who buys that business system developed by the franchisor. The franchisee is expected to adhere to rules set by the franchisor, although he will have complete control over his cash flow. For example, franchisees are not allowed to launch a marketing campaign that is not approved by the franchisor. If the franchisee goes on without such approval, the franchisor may opt to terminate their contract or agreement.
The agreement between franchisor and franchisee is basically one of cooperation, so that if one party does not do his part, the entire relationship can break down and mean a loss for both. If you are a franchisee, it is important that keep this relationship healthy because you know that whatever comes out of it will affect the way you manage your business and, of course, how profitable it becomes. You may still own the business technically, because the capital comes from you, but this type of venture is a combination of your capital and your franchisor’s proven business formula. If you want this venture to be successful, you have to realize that keeping this combination working is essential.…