What is Franchise? The concept of franchising was developed in 1960 in the United States. It is a system in which the franchisee owner grants another the privilege to use his name in exchange for a franchising-fee and also assist them in managing the hotel.
The hotel company called Franchisor, agrees to grant the right to franchise, to conduct the business according to the standards established by the company. The most successful franchiser is ‘The Holiday Inn’ Company. Franchising must be looked at as a 2-way benefit scheme. The franchiser provides certain services and provides certain rights to the franchisee.
For Easy Understanding… A Franchise has the right to use the brand and the business model of a specific parent company for a prescribed period of time. It is a method for expanding a business and distributing products and services through a licensing relationship!
A Franchisor is a company that ‘gives’ the license to a third party for the conducting of a business under their trademark. They specify the products and services that should be offered.
A Franchisee is a company who ‘uses’ the license of the franchisor to do business under his trade name, according to terms and conditions of the contract.
In Hospitality Industry, a Hotel Franchise can be vaguely compared to a chain, since it is a management agreement, that provides certain services (brand, reservation system, support, etc.) in return to follow specific regulations and procedures. In other words the hotel brand is shared by other proprietor.
The Franchiser services are based at 3 levels. As Methods and Systems, Technical Services and Marketing.
- Methods and Systems : Proven methods of work are given to the franchisee in the form of operating manuals; at the same time, the franchiser also makes arrangements for the providing of training to the staff of the franchisee.
- Technical Services : Provides technical services in the various stages, it helps in obtaining financial assistance, helps in the creation of capital budgets and also in procuring consumables – crockery, cutlery, glassware and linen, etc.
- Marketing : Marketing techniques, name of the franchiser and its goodwill, logo, sign, reservation systems, reservation system ownership, and more important partnership.
