What is a franchisee?

A franchisee is a person who enters into a legal agreement with the owner of a business and agrees to market and sell the products and services of the business in return for a pre-determined share of the profits. The exact terms and conditions of a franchising agreement are outlined in the document that is signed before the start of a formal relationship. It is absolutely essential that this document is water tight and communicates clearly the nature of the relationship in order to avoid misunderstandings in the future.

The establishment of a franchising business is a serious commitment with long term repercussions and needs to be carefully thought out. A franchisee needs to determine if he possesses the necessary entrepreneurial skills for managing a business before embarking on any venture. This requires an enormous amount of self-discipline and dedication from the part of the franchisee.

A franchisee also needs to realize early on that while undertaking a franchise is similar to owning a business, the final decisions lie in the hands of the franchisor who will is the actual owner. Marketing someone else’s brand is quite a difficult task as a franchisee needs to view the situation objectively and act in the interest of the business. The selection of a franchisor needs to be done after great consideration; the franchisee should ensure that the franchisor is capable of decentralizing the activities and entrust responsibility. A franchisor committed to the business and willing to accept constructive suggestions that would benefit a business is definitely a better bet than one who is not open to innovative ideas.