Other than the many types of businesses that an individual can start with a franchise, there is another system of classification which is meant to describe a given type of franchise opportunity. Before getting involved in franchise business, it is important to understand these classifications. The first of these is area franchising, which is basically an areas of operation that a franchisee is allowed to operate on.
A franchise agreement of this nature is normally given to individuals or companies who have a track record of setting up successful franchises in the past for other franchisers. Upon being given a geographical territory, the franchisee must develop units in that territory. In the agreement between the franchiser and the franchisee, there are a number of units which must be developed in a given period of time.
In the case that the franchisee cannot develop the number of units as agreed with the franchiser, they risk their licenses being revoked. In addition to revoking the license, the franchisee could also be fined. The territory in question can vary and this depends on the agreement and also the type of business that is to be opened. There are cases where the area can be as big as a state, or even just a small part of the city.
More often than not, the franchiser provides special licensing pricing to a franchisee. Also, there could a certain amount to be paid in royalties, and this is for the areas development franchisees. A franchisee will be required to operate just within the territory that they have been granted, and are not allowed to operate outside of it. If they must operate on areas outside of their domain, it is important they acquire a new license.
In the case where a franchisee was successful in operating a single unit, he or she may be offered multiple units by the franchiser. Normally the franchisee will be given discounts in terms of licensing fees, so that he or she may start several other locations.
However, even in the case where a person does not have prior experience in franchising with this particular franchiser, they need not worry. They can still qualify so long as they can prove their past experience with other franchisers. There is no rule that states that a person must have prior experience with the same person.
When it comes to defining franchise areas, it could be in terms of the geographical size or even by the population of a given area. Depending on the nature of a business, the franchise area could be a small part of a city. It could also be an entire state.
An area franchising is defined in different ways. The media definition states this is an area where a franchise can generate business or advertise. On the other hand, a master franchise refers to an agreement that is between the franchisee and the franchiser. This contract gives the franchisee the first rights when it comes to expansion.
A franchise agreement of this nature is normally given to individuals or companies who have a track record of setting up successful franchises in the past for other franchisers. Upon being given a geographical territory, the franchisee must develop units in that territory. In the agreement between the franchiser and the franchisee, there are a number of units which must be developed in a given period of time.
In the case that the franchisee cannot develop the number of units as agreed with the franchiser, they risk their licenses being revoked. In addition to revoking the license, the franchisee could also be fined. The territory in question can vary and this depends on the agreement and also the type of business that is to be opened. There are cases where the area can be as big as a state, or even just a small part of the city.
More often than not, the franchiser provides special licensing pricing to a franchisee. Also, there could a certain amount to be paid in royalties, and this is for the areas development franchisees. A franchisee will be required to operate just within the territory that they have been granted, and are not allowed to operate outside of it. If they must operate on areas outside of their domain, it is important they acquire a new license.
In the case where a franchisee was successful in operating a single unit, he or she may be offered multiple units by the franchiser. Normally the franchisee will be given discounts in terms of licensing fees, so that he or she may start several other locations.
However, even in the case where a person does not have prior experience in franchising with this particular franchiser, they need not worry. They can still qualify so long as they can prove their past experience with other franchisers. There is no rule that states that a person must have prior experience with the same person.
When it comes to defining franchise areas, it could be in terms of the geographical size or even by the population of a given area. Depending on the nature of a business, the franchise area could be a small part of a city. It could also be an entire state.
An area franchising is defined in different ways. The media definition states this is an area where a franchise can generate business or advertise. On the other hand, a master franchise refers to an agreement that is between the franchisee and the franchiser. This contract gives the franchisee the first rights when it comes to expansion.
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