The concept of franchising was developed in 1960 in the USA. A system in which the franchisee owner grants another the privilege to use his name in exchange for a franchising fee and also assist him 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.
Franchiser services are based at 3 levels:
i) 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.
ii) 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
iii) Marketing – Marketing techniques, name of the franchiser and its goodwill, logo, sign, reservation systems, reservation system ownership, and more important partnership.
Obligations of the franchisee:
i) Definitive standard- which defines the size of rooms, size of beds, types of furniture, TV, VCR, VCD, laptop
ii) Operational standard- cleanliness behavior of staff, quality of service, tariff, frequency of changing linen.
Benefits of the Franchisee system:
- Opening Assistance
- On the job training for the staff
- Accounting System
- Advertising
- Central Reservation system
- Central Purchasing
- Financial assistance
- Newsletters and brochures
- Goodwill and Name
Marriot and IHG are the two most trending franchise groups in India
