An Introduction to Franchising-How Franchising Works; Infographic
In franchising, the franchisor has the proven business formula, method and model.
The franchisor then decides to license the business model in exchange for a recurring payment, a percentage of gross sales, or a fixed fee.
Franchisees then open clones of the franchisor’s business and run them with the ongoing guidance and assistance of the franchisor.
The Franchise Agreement typically entitles the franchisee to initial training, a start-up package, store set-up, ongoing support, national and/or regional marketing support, and the trademark license.
In franchising, the franchisor has the proven business formula, method, and model. Both the franchisor and franchisee must work together for the franchise business to reach its potential and be a success for both parties.
Franchising allows for an expedited and less risky way for people to own and operate a tried and proven business and provides companies a profitable means of expanding.
The benefits to both parties, the local community, and the overall economy can be significant.