From the perspective of a franchisor:
A franchisor is a business owner who grants the right to use their business model, brand, and products/services to an independent entrepreneur known as a franchisee. The franchisor has established a successful business and wants to expand their brand by opening more locations without assuming the financial risk of operating them. The franchisor provides the franchisee with a proven business model, initial training, ongoing support, and access to their products and services. In exchange, the franchisor charges the franchisee an upfront fee, ongoing royalties, and other fees such as advertising and marketing.
The franchisor's responsibilities include providing the franchisee with a comprehensive operations manual, initial training, and ongoing support. The franchisor also ensures that the franchisee adheres to the company's standards and guidelines, maintains the quality of products and services, and protects the brand's reputation.
From the perspective of a franchisee:
A franchisee is an independent entrepreneur who purchases the right to operate a business using the franchisor's business model, brand, and products/services. The franchisee is responsible for the initial investment in the franchise, which includes the franchise fee, building, equipment, and inventory. The franchisee also pays ongoing royalties and fees to the franchisor for the use of their brand and ongoing support.
The franchisee benefits from the franchisor's established business model, training, and ongoing support. The franchisee also benefits from the franchisor's national or regional advertising and marketing campaigns. The franchisee is responsible for the day-to-day operation of the business, including hiring employees, managing inventory, and ensuring quality customer service.
The franchisee's responsibilities include adhering to the franchisor's standards and guidelines, maintaining the quality of products and services, and protecting the brand's reputation. The franchisee also has to pay ongoing royalties and fees to the franchisor and may be subject to penalties for violating the terms of the franchise agreement.
In summary, franchising is a mutually beneficial relationship between the franchisor and the franchisee. The franchisor provides a proven business model, training, and ongoing support, while the franchisee benefits from the established brand and national or regional advertising and marketing campaigns. The franchisee is responsible for the day-to-day operation of the business and adhering to the franchisor's standards and guidelines.