Definition of a Franchise Business
A franchise business is a type of business in which the owners of the business, also known as ‘franchisors’ sell the rights to their business logo, name, and model to third parties. The third parties are known as franchisees. Legally, a franchise includes a license granted by a business owner to another party. Generally, the franchisor licenses a business including its method of operation and its system to the franchisee.
Role of the Franchisor
The franchisor is to grant the franchisee with as much support as the franchisee requires. The franchisor is also expected to take control over some of the franchisor’s operations to protect their brands and ensure that the franchisee operates in line with the business motives and standards which are in place. The franchisee is also to pay a one-time franchisee fee at the beginning of the agreement to the franchisor as well as an agreed periodic royalty fee.
However, the franchisor takes little or no role in the day-to-day operation of the franchisee’s business because the franchisee is usually an independent business operator and not a joint partner. Therefore, although the franchisor gives basic directions on standards of the company, the franchisee is nevertheless free to hire, compensate, and set rules on operations independently. The rate of pay and working hours are also under the control of the franchisee.
Why One Should Start a Franchise Business in Malaysia
Starting a business in Malaysia might sometimes be difficult, especially if the new business owner is starting a business in the county for the first time. There are many elements involved in starting a new business in Malaysia. The owner of the business will have use certain amount of capital to permit it to operate in the best manner possible. Furthermore, branding a new company is not easy; the failure to brand the company appropriately might lead to the failure of the company. Earning the consumer’s trust product is therefore a challenge to those running a business; however, it has been proven that such is an easier task if franchise businesses are involved. Therefore, franchising a business has numerous benefits to both the new business start-ups and franchisor alike. There are also several other advantages which may be claimed by franchise businesses in Malaysia.
The business which is selling its operational rights and name will have expanded its brand without necessarily spending additional amounts of money. Due to the fact that the franchisee is an independent operation unit, its management funds will not be from the brand company. Therefore, the franchisor may expand business operations without using up large amounts capital. Franchising therefore helps entrepreneurs in Malaysia to expand without the risk of excessive debts or financial struggles.
It is not always easy to hire suitable managerial figures in any company. However, starting a franchise business in Malaysia will help provide managerial roles to more deserving figures. Since the new unit is an independent entity which is managed by the business owner, the owner can then make suitable managerial plans which will facilitate the long-term business success of the franchise business in question.
Long-term Customer Commitment
Long-term commitment is a rare trait which is not easy to find among customers. However, those who are willing to give their commitment to a particular company will not easily give up or walk away even when the company and its brand go through difficult times. Long-term customer commitment can be fostered when the franchisor and franchisee work together to achieve outstanding results for the company
Improved Operational Quality
Business owners are tasked with employing better employees and producing quality services and goods in order to retain their customers. The desire to have success will eventually lead to success in the operations of the business because the manager will hire qualified personnel.
In order to make a franchise business successful, franchisees must be creative and use methods which will bring about business prosperity and success. Franchisors and franchisees alike may contribute important input for this matter.