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Franchisee |
Local Partner |
| Corporate Structure |
Individual/Proprietorship/Partnership, limiting value and wealth creation opportunities, 100% liability and risk |
Private Limited company with shares, limited liability and risk |
| License of Business Format |
Available for a limited period after which renewal is dependent on Franchisor |
Available till optional or terminated exit by either of the parties |
| Risk Share |
Franchisor doesn’t share any business risk of the Franchisee. Franchisee remains a puppet in the hands of the Franchisor |
Equal risks and rewards. Parent company shares the risks and ensures better management, insurance, financial and legal support |
| Value Creation |
License of Brand |
Licensed ownership of Brand |
| Wealth Creation |
Limited or no wealth creation opportunities |
Scalable wealth creation opportunity as the shares of the Local Company may be swappable with the Parent Company’s shares at the time of stock market listing |
| Return on Investment |
Franchisor gets their brand fees and profit share in the supply chain management. Not concerned about Franchisee’s profits |
Parent is a partner and a shareholder in the Local Company and in order to maximize its profits, it works closely with the Local Partners to maximize their profits as well |
| Payback Period |
Franchisor promises but delivery depends totally on the Franchisee, the product may click or may not click |
Parent being a shareholder works with best of management skills and innovating branding and marketing solutions to ensure a faster payback period |
| Supply Chain Management |
Franchisee is forever dependent on the Franchisor for supply chain management |
Parent being a shareholder is keen to have efficient supply chain management systems in place so as to ensure better rewards for the Local Partners and itself |
| Balance Sheet and Financial Statements |
Franchisor has nothing to do how the Franchisee’s business fares |
As revenue and profits to the tune of Parent’s share get consolidated in the balance sheet of the Parent Company, it works very closely with the Local Partners for excellent financial results |
| Creditworthiness and Financial Support |
Franchisor not concerned to improve financial eligibility of Franchisees and does not provide any financial support whatsoever |
Parent being a shareholder works towards improving creditworthiness of the Local Partners making them eligible for better credit terms for future growth and expansion, Parent also provides its corporate guarantee to all loans along with Promoter’s margin in cash or collateral and is ready to support the Local Partner in case of any exigencies |
| Net worth |
Franchisor plays absolutely no role in increasing the net worth of the Franchisee |
Parent Company works closely to increase its Local Partner’s net worth |
Business Information 
