What is the difference between a franchisee and a company owned store within a franchise chain? Why might one prefer to be the franchisee or the manager of a company owned store?
The difference between a franchisee and a company owned store is that the franchisee pays a franchise fee to the franchisor, keeping the profits or losses (after any additional commission paid to franchisor if any) with the franchisee while the company owned store does not pay any fees and all of the profits and losses remain solely with the franchisor. The franchisee is responsible for all personnel and operating decision of its store while the company owned store has the vast knowledge of the franchisor to make these decisions.
One might prefer to be the franchisee over the manager of a company owned store is the possibility of financial profits and the franbshciss’s dreams being realized. But one might not want to take the risks of having a franchisee and the possibility of a loss and chose to be the manager of a company owned store.
To have a Taco Bell franchisee one needs to pay $1,200,000 to $1,700,00 in franchising fees along with the costs of land, building, and equipment. The franchising agreement is almost impossible to financing and it has a 20 year term. After 20 years as a Taco Bell franchisee you have to pay another franchisee fee or lose your Taco Bell designation. There would probably also be in your contract a clause that did not allow you to open another restaurant or Mexican type restaurant in your location even if you own the land and the building outright. It is profitable to have a Taco Bell franchisee in many areas as Taco Bell has risen to one of the most profitable companies. Taco Bell (Yumi Yumi Brand) also offers expensive branding and training programs for one to be successful.
If one did not have the large investment required for a franchisee like Taco Bell and they did not want to risk their investment then being a manager of a company owned store is more appropriate. The manager of the company owned store is guaranteed a salary and most times they also share in the profits. Personnel can be provided from corporate and help is readily available for the manager of a company owned store.
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