The Difference Between Franchises and Corporations

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One obvious similarity between franchising and corporate is that both are born out of a successful business model that has a chance of being successful on a large scale. But for the head of an organization deciding whether to sell franchises or become a corporation, there are clear differences across the board. Here are the ten most important differences between a franchise and a corporation. The possession As mentioned, there is a huge difference between a franchise and a corporation. In fact, this is one of the most fundamental differences between the two.

With a corporation, the head of the corporation retains ownership of each open slot. Corporations also have shareholders who share the profits and bear the risk in the event of financial loss. On the other hand, franchising a email list business means allowing other business owners to open new branches. These business owners are often referred to as franchisees who own and operate their own business under the franchise name. Control With a franchise, each third party owner has limited control over how the business is run. Most business operations are set up by the franchise, which is why the menu is the same at every McDonald's you've visited.

Meanwhile, those who work in company-owned stores have almost no control over business decisions. Instead, the board at the top of the company makes the decisions. Legal training The process of setting up a corporation legally tends to be quite complicated. It is not something that can be done lightly and requires a lot of legal assistance. But a franchise store is a little simpler. The third-party owner signs a contract with the franchiser, and as long as both fulfill their part of the contract,everything usually goes well. Motivation The motivation of franchise owners is different from that of corporations. These third party owners usually have a vested interest in the business because they have made a personal and financial investment to start the business and pay the franchise fees.