Some Essential Information About Franchise Businesses

A franchise business is a venture in which an owner, also called a franchisor, sells his business rights to a third party who is also known as a franchisee. The rights that the business sells include the business logo and the model that it is built on. This has become a common form of business especially in a country like Australia.

For a person to become a franchisee, he must follow some laid down standard procedures. There is a fee that he must pay the franchisor so that he gets those rights and equipment. The training that he would receive is also included in the package. The subsequent fees are called royalties and must be paid on an agreed period of time, which can be monthly or quarterly. Royalties are calculated on the gross sales that the franchisee makes and not on the profits.

The franchisor in most cases requires that the franchisee runs the business on the same model. If the franchisor’s employees have brown uniforms, so should the franchisee’s. The idea is to run as one business offering standardised items yet owned by different persons. This also goes to product pricing; the franchisee must set his prices to tally with the franchisors'.

Most of the business licenses when it comes to matters of franchising go up to five years which can be renewed if both parties are satisfied. The franchisor is not limited as to the number of franchises he can license provided he is satisfied that a particular franchisee will bring in good returns.

Author: Todd Johnson

Email: Todd@australianwebsitedevelopment.com.au
Mobile: 0449 041 815