Some Facts About Franchise Business

What is franchise business?

Franchise business is a form of trade practiced by few companies for distributing their products by third parties. The independent operator trades with the business method, goodwill and goods of the company. He/ she has to pay a royalty fee and a percentage of their total income to the company. The company who allows the independent operator to use its trademarked goods is called the franchisers. The independent operator who takes this kind of dealing is called franchisee.

Which are the companies who can opt for this form of trade?

This form of trade is very useful for expansion purpose. Some companies who can opt for this kind of dealing are:

• Companies with a good annual profit record.

• Companies expanded over a larger geographical area.

• Companies with unusual concepts.

• Companies which are less expensive to operate.

What are the advantages of Franchise business?

Such trades are advantageous on the part of the owner as well as the holders. From the holder’s perspective:

• It provides self employment opportunities to the person who has acquired the license for some trade from the owner.

• It provides an opportunity to start this form of dealing without having to go through a lot of hazards of starting a new company altogether.

• It provides the new holder with training from the prime owner. With this expert training he/ she stands with a bright opportunity of expanding their trade.

From the owner’s perspective:

• They have the opportunity to expand their business over a larger area.

• They will have to go through lesser legal proceedings. It is a kind of selling out the ownership with some other person.

• They will have the opportunity to get a higher income. The holder will utilize his full expertise to attain the highest income. This in turn will come as an income to the owner.

Therefore, on an overall basis you can call such dealings the safest bet for you. If you are the owner then you can get your business expanded without having to worry a lot. At the end of the year you can expect to get a handsome amount as royalty fee and percentage of the total income of the franchisee business. If you are the holder then you can enjoy the entire profit of the business by giving out only a part of the total income. The success of both the parties depends on how well they bid on the contract amount. The holder will be successful if he can bid the lowest royalty fee and percentage on the total income. The owner is always the most beneficent. In any case, it is a win-win situation for both the parties.