What is the difference between Franchise and Chain?

A franchise is a type of business where some business rights are transferred to a third person; these rights include business name, business logo, or business model. However, the franchiser still has the right to request that the business model remains the same; this includes the pricing, methods, and other things that makes the business different.

The third-party pays an initial fee to the franchisor (the person that established the trademark) for the business right in order to operate in another place. While a chain is when a parent company has different branches in different locations, there is no transfer of right to any third party, the entrepreneur still owns and rules all business with its trade name.

A franchise is a type of business in which the proprietors sell some business entitlements to third parties. Certain of the rights sold in this type of business are the company name, logo, and business model. The franchiser may necessitate that all of the business variables to remain intact, such as pricing and business methods. A chain is a grouping of one or more stores that have one owner.

The type of business possesses the same name, sells the same merchandise, and follows the same rules. The chain maintains total control of the store. Examples of the advantages of operating a franchise include ongoing support through advertising, and reduction of the workload on brand name recognition and marketing strategies. Examples of the benefits of operating chain stores include, the chain holds full ownership rights, and it is easy to spot an unprofitable branch, and either close it or move it to another location.

Franchise refers to a type of business whereby the owner of the business grants a franchisee the right to sell or distribute his goods and services in a certain area. When this is done, the real owner of the business loses some rights over the business. Some of these things are the business logo, brand, business name, goods, and services. This is to allow a franchisee to have his separate logo, name, and brand for the business.

However, before a franchisee can buy a franchise, he or she will need to pay a certain amount of money to the owner of the business. And depending on the agreement, a certain amount of money will still go to the franchiser even after a franchise has been sold. A chain, on the other hand, refers to a number of businesses or stores that belong to one person. These businesses are usually run with the same brand name, logo, etc. The profit and loss from a franchise will be shared between the franchiser and the franchisee, whereas the profit and loss from a chain belong to the owner.