A franchise is a type of business that involves the marketing of goods and services. In which one person (natural or legal) grants another the right to use a trade name for a specified period of time. This is a commercial and legal relationship, in which a third party (the franchisee) pays an established sum of money to a business owner (the franchisor) in order to operate a business.
This will be done using their brand, their business model and its business name. The franchisor shares with the franchisee a body of knowledge (marketing, financing, strategy, operations, training plans, etc.). And provides them with ongoing support so that they can successfully operate their business according to the business and administrative requirements of the market. The franchises are often part of an expansion strategy as they capture markets faster. You may want to look at Franchise Direct to look more at how investments can work.
Elements of a franchise
Franchisee: A franchisee is a legal, financially and legally independent person who signs a franchise contract. They have the right to exploit for his own profit the marketing of products or services in a specific geographical area.
Franchisor: The franchisor is the holder of the franchise right for a business idea. It coordinates and manages a network of franchisees to which it provides common services (advice, marketing, product, etc.). This is in exchange for a royalty on the sales that franchisees advance.
Franchise contract: This is a contract by which a franchisor, for a fee, assigns to a franchisee the right to operate its system of services.
Brand: The franchisor owns the brand and gives the franchisee the right to use it. The use of the mark must be made in accordance with the identity and conditions of the company.
Know-how: Know-how refers to the skills, knowledge, processes and systems that a company has acquired and passed on to the franchisee. It is usually this element that makes the difference between failure and success in a franchise. Normally, the franchisee receives an operations manual with the procedures to be followed.
The need to reinvent yourself
In the current context of globalization, franchising is a very important element for the entrepreneur. However, this will only remain true if franchises reinvent themselves and adapt to the demands of a post-Covid world. We know today that consumer behavior and therefore demand will be affected.
Social media plays a big role in things. If your social media aligns with the business, then you can promote it well enough. Creating unique content is essential for many businesses to increase sales and visibility online. This factor is crucial for many industries, as word of mouth is one of the most powerful influencing factors in the consumer's buying process. During and after the coronavirus pandemic, businesses will need to double their marketing efforts in order to expand their customer base and increase brand loyalty.
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