What is the meaning / definition of Franchisee in the hospitality industry?
The Individual, group or business that possesses or operates a franchise under an agreement with a franchisor.
Being a Hotel Franchise Company
can allow business owners to start a business according to a tested methodology. This provides many benefits as well as some tradeoff compared to starting a business from scratch.
Some of the benefits of being a franchisee are that franchisors offer the independence of small business ownership supported by the benefits of a bigger business network. By being part of a bigger organisation a small business can benefit from the accumulated marketing efforts of the brand, thereby enabling a reach not possible for a small business owner.
Franchisors usually provide the training you need to operate their business model, thereby granting you access to unique knowledge.
Franchise Pro’s:
The security that a greater organisation provides, enables franchisees to be safer than other start ups, thereby having a higher chance of success. This allows the franchisee easier access to credit when applying for a lone from a bank. Due to the safer investment there is a higher likelihood to receive financing for a franchise, in comparison to a other start up.
Franchise Con’s:
On the other hand, being part of a franchise also comes with the difficulties. If you buy a franchise this means you are entering into a formal agreement with your franchisor. This means that you are bound to certain rules and regulations, therefore have no absolute freedom in decisions. Often you are bound to a certain product and a specific type of suppliers. This means that if the franchise itself is operating badly, you will ultimately also be affected. Furthermore, there are ongoing costs called Royalty Fees that need to be paid to the franchisor, which reduce your own profit margins.
See also:
- Hotel Franchise
- Franchise Agreement
- Franchisor
- Franchise fee
- Royalty Fee
- Franchise disclosure Document
