The bond between a franchisor and franchisee
Franchising today is one of the fastest growing business models in today’s scenario and has permeated to almost every sector of an economy. The basis of a franchising relationship is the equation of "give-and-take" between the franchisor and franchisee. This relationship is unique in business since the franchisee is given the legal right to promote and manage a franchisor’s business. Commonly referred to as a ‘commercial marriage’, this ongoing business relationship provides the franchisee with the advantages of a big business.
This relationship includes sharing of the product, service and trademark plus the entire business concept beginning from the marketing strategy, plan, systems, formats, standards, and training to quality control and consistent guidance and supervision. It is a win – win situation wherein, the franchisor can capitalize on the expertise of the franchisee and take his business forward while the franchisee gets to manage an already established business at optimum costs.
The ‘commercial marriage’ between a franchisor and a franchisee is bound by law, with a clearly defined set of pre – determined responsibilities and duties for both parties. This commercial contract is highly subjective and varies from one business to another depending upon the requirements of the nature of business. By the very nature of this relationship, however, the franchise agreement will slightly favor the franchisor as he will possess ultimate control of the business.
While franchising may seem like a certain method to expand businesses in a safe manner, it must also be borne in mind that there are certain risks attached to this relationship and this is merely an innovative strategy not a guarantee of success.