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What is Franchising

The term “franchise” refers to a business strategy utilized by a company to reach out to the market. An enterprise is also able to involve its own or franchising subsidiaries for this purpose.

A company uses franchise as a business rule composer to attract and preserve clients. This term involves a system of marketing used to cultivate in potential customers and regulars’ minds the image of distributed products’ necessity and profit. Franchising means a way for products and services distribution allowing responding to needs of clients.

 

Franchise creates continuing interrelated business relations providing people with an efficient exchange of:

  • Brand authentication;
  • Effective solutions of running a business;
  • Well-tried network of sales and marketing.

All in all, franchise implies strategic alignments of individuals having particular relations and focal points united by a shared objective to prevail on the market; that is, to attract and preserve more clients than their business rivals.   

Franchising is often misinterpreted being most commonly referred to a process of purchasing a franchise and becoming a franchisee. In sober fact, a person invests his or her means in a network to employ the commercial name, operational system and continuous maintenance and support. Those who use this system are authorized to utilize the current operational system and branded name.    

Business relations are is a cooperative pledge of all franchisees to attract and preserve clients. On legal grounds, a person must attract and preserve customers by applying the appointed by a franchisor distribution, operational and marketing systems.

To succeed in franchise, a person has to realize the consequences of a partnership with a franchisor and franchisees in terms of legislation and private sector. All franchisees must provide networking between the branches and cooperation of managers for brand development and entirely utilize operational system for attraction and preservation of clients.

This article provides a detailed overview of advantages of business running as a part of a large entity.

A person should not consider other operating subsidiaries and franchisees as competitive activities. It’s just the other way round. They are united by a common goal to launch a brand on the market, ensure its dominating position there and enhance customers’ knowledge and credibility in the brand. This is a team work of all members of a system. All franchisees split the trust for efficiency, quality, sustainability, and other aspects that determine their franchising and ensure recurrent business activity for all participants of the process. The increase of the brand’s name value is a split trust between a franchisee and a franchisor.

A “proprietary way of thinking” destructs the possibility of the successful functioning of operational subsidiaries and franchise units. This idea is worth considering. In case a person thinks he “purchased” a franchise, he becomes a proprietor and starts acting as a proprietor. He would intend to alter the system due to his own needs, or get disappointed because of paying royalty fees, or consider other franchise units as business rivals. For some reason or another, a person doesn’t want to consider himself as an unrelated proprietor.

A franchisee acts as a proprietor of his company’s funds that are selected for investment in third party’s brand, operational system and current maintenance. He owns the capital of his enterprise but is authorized to use an adopted business system.   

In the last analysis, the aspiration to take a position of a franchisee has to be based on the person’s trust that he is able to become more prosperous by applying the third-party’s brand and operational system in accordance with the prescribed rules, than by opening an independent enterprise to enter into rivalry against them. Thus, a person should search for a reliable franchisor who is creating a network of interrelated franchisees who constantly seek to attract and preserve clients, to expand quicker than others in this sector, and to make wide profit margins, as well.  When a person finds a franchisor understanding this structure and interdependence, this franchisor is worthy of his or her considering.