Understanding the dynamics of the franchisee-franchisor business relationship

What exactly is a franchise? How do you decide for yourself whether you are suited for one? Let’s try to find out answers to these questions to get the concept clear.

To answer in brief as to who should consider being the franchisee, the answers are very apparent. If buying out an existing business does not look like a proper choice for you, or starting right from scratch seems a bit intimidating to you, you should definitely consider the franchise ownership option.

Let’s consider various vital elements of the franchisee-franchisor business arrangement. They are as follows:

The franchisee essentially pays a franchisor some initial fee apart from ongoing royalties. In return, the former gains the benefit of a trademark along with logistical backing and expertise from the franchisor.

It largely means that the franchisee gets to make use of the franchisor's system of running business to sell its branded products or services.

In other words, paying fees and royalties gives the franchisee the right to use intellectual property of the franchisor on basis of mutually agreed terms and conditions.

As the franchisee, you have a ready-to-use modus operandi to employ since the research has already been done for you by the franchisor who also gives you a clear idea of the impending challenges in terms of competition and an insight into how to tackle market challenges by differentiating yourself from your competitors.