Continuing with our series of franchising terms and definitions, today we’re talking about company-owned franchise locations.
A location, owned and operated by the franchisor, usually identical in appearance and operations to those of the system’s franchises. While not required, most company-owned locations contribute to the system’s Ad Fund.
In the world of franchising, you have the franchisor, and the franchisees. Typically, most of the franchise locations are owned by individual operators, called franchisees. However, the franchisor can also own an individual operation or individual operations. Those are referred to as company-owned locations.
Many franchises have company-owned locations, and it usually has to do with the evolution of the franchise itself. Some franchises start out with one location as a small business. The small business becomes successful and the owners start to open more operations, eventually deciding to form a franchise. At that point, they start selling to new outside owners to be franchisees in the franchise.
The original handful of locations, however, sometimes remain as operations owned by the main franchise, instead of another individual or other individuals owning them.
As mentioned above, while it isn’t required, most company-owned locations contribute to the franchise advertising fund. Since all of the franchisees contribute to the national advertising fund, the company owned operations typically contribute to the fund as well, in order to be fair and consistent with the franchise model. Some franchisees might find it unfair if the company owned locations don’t have to contribute to the add fund, but get to reap many of the benefits by being part of the franchise.
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