AbstractÂ
The franchise business model is focused on several considerations and consists of necessary steps beginning with desirable conditions for implementing this system; the purpose and capacity of franchisors to form franchises based on their company; the creation and formal development of franchise systems; and their further activity. The paper underlines in essence the business market system of the USA and the circumstances of implying this model, where many people are searching the principle “franchise for sale.”
Keywords: franchise business model; franchise business opportunities; franchise business; franchise for saleÂ
Definition: The Cambridge Dictionary explains the term as the right to sell a company’s products in a particular area using its name.
IntroductionÂ
The business model of a franchise is one of the modes of growth (business) of an organization centered on contractual ties, particularly in services. Owing to the intense globalization methods, franchising popularity has significantly improved in recent decades. Yet the U.S. remains the largest organization sector pursuing the franchise scheme.
The USA a Pioneer of Business Market System
The USA is considered a founder of the franchise scheme. Nevertheless, U.S. industry dynamics have a significant impact on European businesses owing to global market growth. Therefore, the franchise company system was moved to the European market and is now spreading successfully.
Franchising has made an enormous contribution to the overall American economy and proved a profitable path for much pursuing liberty and financial security.
Particular Conditions for Developing A Franchise Business ModelÂ
Supporters of this form of production announce that friendships are enticing alternate business structures for global markets. Business founders are not aware of the target market’s buying power capacity, the adaptation of goods needs high prices, and the political environment is uncertain. The company’s international know-how is low.
However, some basic requirements for the creation of the franchise business structure are necessary: licensed, safe and famous brand, clearly built and secured business system from rivals, maintaining company productivity and consumer attraction and judicial structure and laws in a specific nation guaranteeing brand security, intellectual property, trade secrets and other essential elements of a company franchise scheme
Difference between The Franchisor and Franchisee
The Franchisor is the parent corporation that offers franchise rights to prospective franchisees. Also, he has built the business, brand, and operating systems.
On the other hand, the franchisee is the person who owns the rights to market the goods or services and uses the existing and validated business systems listed above. While the franchisee effectively buys a pre-established business, franchisees must work hard to build loyalty in their region, recruit talent, and expand their franchise business. After all, it is the franchisee that operates every day.
ConclusionÂ
Although franchises are small companies that populate virtually every local urban business district and have significantly added to the national economy, community development experts seldom see this business model as a feasible economic development tool.
To sum up, a successful fit between Franchisor and franchisee, exchanging common interests for the long term, is the key to each franchise unit’s success. Therefore, the brand is an essential aspect that all parties must take seriously before any contract is signed.
