An independent small business proprietor running a franchise is referred to as a franchisee. By doing this, the franchisee has acquired the right to promote and sell the same brand while adhering to the same standards as the original business by using the trademarks, related brands, and other proprietary knowledge of an existing business.
KEY LESSONS
A franchisee is a proprietor of a small business who runs a franchise.
The franchisee pays a fee to the franchisor in exchange for the ability to utilise the company’s well-known success, trademarks, and confidential information.
The franchisor offers ongoing advice and assistance to the franchisee.
The franchisee maintains the same standards as the parent company and markets and sells the same brand.
Knowing about franchises
Franchises are a very popular type of business. In most cities, it is actually difficult to travel more than a few blocks without coming across a franchise establishment. Well-known franchise business models include those of H&R Block, Subway, United Parcel Service, and McDonald’s (NYSE: MCD) (NYSE: HRB) and Inspiration Learning Center. There are franchise business opportunities in a wide range of industries available in Canada.
Making a franchise for a company’s goods and brand name could be one way to get greater market share or expand its geographic reach at a minimal cost. The original or currently operating company that sells the license to use its name and concept is known as the franchisor. The person who purchases the right to market the franchisor’s products or services using the established brand and business model is known as a franchisee.
Franchisees and their franchisors naturally have an advisor-advisee relationship. When it comes to general business methods like hiring and training employees, opening a firm, advertising products or services, sourcing supplies, etc., the franchisor continuously offers advice and support.
To start, the franchisor assigns the franchisee an exclusive location where no other franchises within the same underlying business currently operate in order to prevent competition and help ensure success. In return for the franchisor’s advisory role, use of intellectual property, and experience the franchisee generally pays a startup fee plus an ongoing percentage of gross revenues to the franchisor.
What distinguishes a franchisor from a franchisee?
The individual or business that controls the trade names and business strategy is known as the “franchisor.” The franchisor often grants the franchisee a license to utilize the trade name and business model in exchange for an initial payment and recurring royalties. The person or corporation that owns and runs the business utilizing the trade name and business model system leased from the franchisor is referred to as the “franchisee.”
