Franchises are a great way to get into and start a new business. A franchise is an authorization to sell a company's products or services, usually within a defined geographic area. Firms that offer franchises can offer franchise branches to individuals and can operate company-owned branches as well. Some do both, while some concentrate on one or the other. A franchisee usually pays a predetermined fee up-front for the franchise and then must pay an ongoing percentage of revenue periodically. A company owned store within a franchise is simply owned and managed by the company itself. Franchisees may be limited in how far they can stray from established company rules and procedures.
Although individual situations can vary, it is understood that franchised stores are generally more profitable than company owned stores. So a franchisee is required to operate within a framework of rules provided by the franchisor, but has the ability to enjoy substantial profits as a reward. Company owned stores are sometimes caught between the two worlds; the franchisor may see running at least one store as a necessary part of relating to its franchisees, but may not desire the day-to-day staffing and management demands that this entails.
The ability to grow rapidly with a relatively small staff and small payroll requirements is one of the great attractions of franchising. A company owned store goes against this, requiring additional staff and commitment.
http://www.franchise-chat.com/resources/franchise_versus_company_operations.htm
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