Franchising is a method wherein the franchisee is practicing a business philosophy of a franchisor. They agreed and signed a MOA (memorandum of agreement), wherein the franchisor grants other people to distribute their products, usage of trademarks and techniques in exchange of royalty fee and a percentage of monthly gross sales. Other supports from franchisor are the products training, marketing strategy, and staff uniform (applicable for restaurant or fast food business).

Franchising, according to some people is advisable to those people who wants to have their own business, but clueless or do not have any idea to the business protocol. It is a safe way of running a business, for when you buy a franchise, all the necessary trainings and supports are going to provide by the Franchisor.

Numerous companies are often and practicing franchising. Nevertheless, before awarding the franchise title, there are many things to consider and needed to check to the franchisee, such as the background specifically in the financial and personal capability of the person, the management ability of the franchisee and the area or location of declared responsibility. This process is a way of protecting both parties to any problems that may occur.

In granting a franchise, franchisor still need to study which type of methods are they going to utilize, for there are several franchising methods and it is very necessary to know which one is going to apply before starting the business operation.

Methods of franchising:

1. Single-unit franchising – this is the most popular among them. One franchisee to one area
2. Sequential franchising – If the franchisee shows good record in his/her first franchise, the franchisor may allow them to get or have another franchise to other location.
3. Sub-franchising – the franchisee has the go signal or the right to approve another franchisee under his or her supervision.
4. Area development – A variation on sequential franchising

5. Area representation – also called as the master franchisee. He or she is the representative of the assigned region.

One of the disadvantages of franchising is that the franchisee has no license to neither change nor add anything to the business without the approval of the franchisor. Anything about the business philosophy is under the control of the company owner or the franchisor.

Related posts:

1. Dunn Bros Coffee Named One of the AllBusiness AllStar Top 300 Franchises of 2009
2. Domino’s Pizza Announces Paid Training While You Learn Program
3. General Motors Studies Bankruptcy Option
4. TARP Program To Save General Motors and Chrysler