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. 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. To be allowed to operate the franchise is supposed to pay the franchisor specific amount. There are financial commitments that the franchisee must fulfill to be given the green light to operate. The franchisor only allows the franchisee to operate only when trademark’s royalty, the cost of training and advisory services and agreement to pay a certain percentage of each unit sold are met.
When the franchise succeeds the franchisor also succeeds. The franchisee’s period of operation is limited to the franchise agreement. It is possible to renew the franchise agreement. The agreed location is where the franchise is supposed to operate.
The franchisor protects the trademark while the franchise is charged with the obligation of carrying out the services which the trademark entails.
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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 franchisor and the multi-franchisee agree on what number of units to open and in what period and in a specific geographical region. A unique agreement for each unit of the franchise is set.
The popularity of multi-franchise is very high. The popularity of the multi-franchises has risen in the recent past.
To set up multi-franchises high levels of investments are required. The good thing about them is that they provide a high level of stability. 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. The single franchise relies on just one location which might disadvantage it.
Due to their popularity multi-franchises have witnessed exponential growth. When the franchisors realizes there is huge potential in multi-franchises they encourage the multi-franchises to open more and more units than before.
The other units of a multi-franchise might come into action to help a unit that might be lagging behind regarding performance.
The viability of multi-franchises relies on good research. Ready cash and other forms of investments are needed for the multi-franchise to thrive.