Franchise owner jobs

What Exactly Is a Franchisee?

A person who owns and manages their own independent small company is known as a franchisee. A franchise is a kind of third-party retail outlet. By doing so, the franchisee has bought the right to utilize the trademarks, related brands, and other proprietary information of an already established firm in order to advertise and sell the same brand while upholding the same standards as the original business.

KEY TAKEAWAYS

A person who owns a small company and runs it as a franchise is referred to as a franchisee.

A fee is paid to the franchisor by the franchisee in exchange for the ability to exploit the business's existing success, trademarks, and intellectual information.

The franchisor provides the franchisee with ongoing direction and assistance throughout the relationship.

The franchisee is responsible for the marketing and sales of the same brand as the original firm and keeps the same standards.

Understanding Franchises

The use of franchises as a model for conducting business is quite popular. In most cities, it is difficult to travel more than a few blocks without spotting a franchise company. In fact, it is almost impossible. McDonald's (NYSE: MCD), Subway, United Parcel Service (NYSE: UPS), and H&R Block are some well-known examples of franchise business concepts (NYSE: HRB). There is a broad range of sectors in which individuals in the United States of America might pursue business possibilities in the form of franchises.

Creating a franchise for a company's product and brand name is one option for a company that is looking to expand its market presence at a minimal cost while also gaining a larger portion of the market or increasing its geographic footprint. The original company or one that already exists might become a franchisor and sell the license to utilize the business's name and concept. The person who buys into the original firm by obtaining the right to sell the franchisor's products or services according to the already established business model and brand is known as the franchisee.

Inherently, the connection that exists between a franchisee and a franchisor is that of an advisee and an adviser. The franchisor offers ongoing direction and assistance for general business tactics, including the recruiting and training of workers, the setting up of shops, the promotion of goods or services, the procurement of supplies, and so on.

To begin, the franchisor will provide the franchisee with an exclusive area in which there are no other franchisees operating for the same underlying company. This action is taken to eliminate competition and improve the likelihood of the franchisee's success. In most cases, the franchisee is required to pay a launch fee in addition to a continuing percentage of gross profits to the franchisor as payment for the franchisor's advising role, use of intellectual property, and previous expertise.

Franchisee Benefits

Because of the following reasons, owning and operating a franchise might be an excellent choice for certain aspiring business owners who have little experience:

Because the expenses associated with operating a franchise are often cheaper compared to the expenditures associated with starting a company from scratch, franchisees need relatively little initial money to get their businesses off the ground;

Consumers may already be familiar with the franchise's brand and benefit from the advertising efforts that are being run by the franchise; and

Franchisees often get a significant amount of assistance due to the fact that franchisors have a tendency to actively monitor their newest franchisees.

Franchisee Responsibilities

A franchisee is required to adhere to the tried-and-true business model that has already been established, since this facilitates the maintenance of a constant level of operations throughout all of the businesses that use the same brand name. Within the franchise's designated service territory, it is the franchisee's duty to expand the business by promoting it via the conventional channels of advertising and marketing.

Before being made available to the general public, however, any and all marketing initiatives need to first get compliance with and approval from the primary institution. It is the responsibility of the franchisee, in their role as manager of the franchise, to safeguard the reputation of the franchisor's brand by providing only authorized goods and services that are associated with the name of the firm that originated the franchise.

An Example of a Franchisee: McDonald's

McDonald's, the giant of the fast-food industry, is a firm that has a presence all over the world as a result of its franchisees. In 1940, two brothers named Ray and Maurice McDonald opened the first McDonald's restaurant in San Bernardino, California. However, Ray Kroc launched the first formal franchise for the McDonald's System, Inc. in the year 1955 in Des Plaines, Illinois. McDonald's System, Inc. was a forerunner to today's McDonald's Corporation (MCD) (a suburb of Chicago). 1

There were 39,198 McDonald's restaurants located in 119 countries throughout the globe as of the end of the fiscal year 2020, with 93.17 percent of those stores being franchised. As a result, the organization now consists of 36,521 franchisees. 2 The long-term objective of the McDonald's corporation is to have 95 percent of its outlets be run by independent franchisees.

Either McDonald's owns the land and buildings that are utilized by its franchisees or it has secured long-term leases for the locations at which its restaurants are located. The franchisee is responsible for contributing some of the necessary funding as part of the contractual agreement reached with the firm. This contribution takes the form of an initial investment in the furnishings, fittings, and fixtures that the company will offer at the given site. McDonald's requires would-be franchisees to make an initial down payment equal to 25 percent (of the total cost) for the acquisition of an existing restaurant; at least 25 percent of the down payment must be in cash. This requirement applies only to the purchase of existing restaurants. 3

The legendary success of the McDonald's franchise tale is in part a consequence of the company's dedication to maintaining uniform standards in its menu, which resound across all of its many locations. This devotion has helped McDonald's become one of the most successful franchises in history. It is expected that a Big Mac in Los Angeles would have the same level of quality as one in London, and in fact, it does. Franchisees are in charge of making their own choices on price and staffing, but they still get the benefits of McDonald's strong brand equity and extensive worldwide expertise.

Is a Franchisee Also the Owner of the Business?

Even if the franchise that they run falls under the category of "business," franchisees are still regarded to be company owners. According to the franchise agreement, this may restrict the business owner's freedom of action and the extent of his or her authority over the company. A McDonald's franchisee, for instance, is prohibited from selling goods from Burger King and is required to utilize the official McDonald's logo and branding.

Is There a Difference Between a Franchisee and a Franchisor?

Actually, the entity that owns the intellectual property, patents, and trademarks associated with the brand or company that is being franchised is referred to as the franchisor. A franchisee is a person who purchases the rights and licenses necessary to run a location that is owned by a franchisor.

Is It Possible to Fire or Get Rid of a Franchisee?

It is possible for the franchisee to be dismissed for reason if they violate any of the conditions or covenants included in the franchise agreement. It is possible to argue in court that the franchise was improperly terminated if the termination was seen to be without a valid reason.