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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. The franchise could be simply compared to 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. The right to deal in products of the original company is not free of charge. The original company requires to be paid a commission of what the franchise sells. 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 success of the franchisor depends on the success of the franchise. The franchisee’s period of operation is limited to the franchise agreement. It is possible to renew the franchise agreement. Every single franchise is supposed to operate at the agreed location. 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. Single franchisee operates only one unit while a multi-franchisee 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 multi-franchise is very popular and they are in high numbers. Multi-franchise has had much influence over the many years they have been in existence. Multi-franchise requires high levels of investments. Multi-franchises have high levels of stability which is their major advantage. The level of success of the multi-franchises is very high. Single franchises may not be as successful as the multi-franchises. One location that a single franchise operates from might disadvantage it. 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.