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Get to Know What Franchising Means When a business gives permission to another business to operate in its products is what we call franchising. 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. 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. 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. Every time the franchise agreement expires it could be renewed. The franchisee is also required to operate in a given location. Every party to the franchising concept is charged with a different role; the franchisor is obligated with protecting the trademark while the franchisee is charged with the role of carrying out the services that entail the trademark.
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Two types of franchises exist- the single franchise and the multi-franchise. Single franchisee operates only one unit while a multi-franchisee 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 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. High levels of investments are required to set up multi-franchises. The good thing about them is that they provide a high level of stability. 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. With the success of multi-franchises the franchisors might want to cash in on that huge success by encouraging the multi-franchises to open more units. If it happens that one unit of the franchise fails the other franchise units may come into the equation and help it to rise to glory. 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. Ready cash and other forms of investments are needed for the multi-franchise to thrive.