What is a franchisor?

A franchisor can broadly be defined as a person who gives certain selected people the right to market and advertise certain products and services of his business. Franchising is an important business format that is of mutual benefit for both the franchisee and the franchiser.

The franchisee can make use of the reputation already established by a business and work towards reaping success for all the stakeholders. The main reasons a franchisor chooses to franchise his business can be described as follows:

A franchisor is presented with a great opportunity to raise capital through franchising. The initial franchise fee paid by the franchisee can be used to finance and grow the business. The franchisor can use the money to generate infrastructural facilities that will benefit the business. Franchising provides an opportunity for the franchisor to leverage his brand as he will be in a position to reach out to a broader target audience. A franchisor can take a call to expand his business by building a bigger and better network. A wider network will help a franchiser conduct better business at optimum cost since operational costs will decrease if production increases. The franchisees are directly in touch with the customers and help in gauging the requirements and opinions of the consumers about a product. A franchisor can hand over the day – to – day running of the business to the franchisees and ensure efficiency through de – centralizing the business activities.

Franchisors take a lot of care in selecting a franchisee to handle his business concerns. Good management skills, selling skills and customer management skills are some of the most important qualities that are required from a franchisee.