Franchising Difference between Company Stores and Franchisees; Which to Choose

In franchising two important parts of the arrangement are the franchisee and the franchisor. To be clear, the franchisor is the one that develops the idea and markets it; the franchisee is the entity that purchases the franchise, agrees to conditions and pays the fees. Franchising can cover a very wide range of products or services; from restaurants, such as McDonalds, to personal care, like Supercuts.

Under most conditions, an application packet is provided to the prospective franchisee outlying the basic start up conditions the franchisor requires to be considered as a franchisee. Normally certain minimums; regarding cash, assets and experience are required to be included in a very detailed personal financial statement. Many franchising organizations also require a training commitment after they review the application. If selected for the training, it is considered as a first interview; followed up by a second if the applicant does well during the first session.

As a franchisee, you are an independent owner operator but with specific conditions contained within your franchising agreement. Often times, the general public is unaware of the difference between a franchisee business and one owned by the company. This is due in large part to the fact that most franchisors do not promote or advertise a difference; nor do the franchisees. One reason for this is to maintain a cohesive and consistent image of the company brand.

A franchisee owned store is an independent business and all decisions are handled by the owners of that particular franchise; taking into account the rules and guidelines contained within their franchising agreement. They are also subject to changes and adjustments that the corporation develops; such as the new coffee drinks McDonalds recently added to its menu. However, all of these things such as prices, menu offerings, locations, design, style; are normally covered in the franchising agreement. Employees of franchisees stores are employees of the franchisee owners, and are bound by whatever terms they were hired under. Some franchisors may include terms to cover employees hired by franchisees in their franchising agreements.

In a company owned store all decisions about the business are made through the corporations system based on its strategy, stakeholders and operational guidelines. All individuals working at the company stores are connected to the corporation; under whatever terms in which they were hired.

Some individuals are drawn to franchising, due to the security of a proven successful brand that has eliminated many of the pitfalls that can be connected to starting or buying a business. Many of the details have been predetermined in an almost kit form; to best improve the chances for success. McDonalds, is not interested in developing unsuccessful franchisees; that is one reason why they have a very stringent prescreening process. In franchising, you have the opportunity to be your own boss, the owner; with some strings that do not exist in a non-franchised business; where you can do whatever you want. The difference in franchising is fewer decisions, which mean less risks; because you are following a road map of past historical success. It is not that you cannot fail but the franchising organizations believe they have reduced the chances of it.

All franchisors are required to comply with guidelines laid out by the Federal Trade Commission. They must also develop a Uniform Franchise Offering Circular that meets all state franchising laws in states which the franchisor plans to operate. These factors offer additional protection that is not existent in starting or buying a non franchised business

. As for being part of the management of a company owned store the bottom line is that you are an employee not an owner. Your role and responsibilities are based on your performance, politics, the economy, company infrastructure as in any other company. Although from what I have read quite a few of the owners of franchises are former employees or managers. Also many of the organizations like McDonalds; have a history of promoting from within. This could be an attractive reason for selecting to work for a company owned store; as opposed to buying one without any experience. It comes down to the company you select, its reputation in the marketplace, being a good fit and what you are seeking. Again these decisions are not any different than what any other job search candidate is seeking.

As for which one would be better to be connected that is highly dependent on individuals’ life goals, financial and management aspirations; as well as their financial health