Question

differentiate between a Chain store and a franchise Store​

Answer 1

What’s a Chain Store?

In the business world, a chain means a group of stores (typically two or more). They possess the same name (brand), and adhere to similar corporate store policies, sell the same products, and often owned by the same parent company. Here, think of Wal-Mart as a chain of mass-retail supermarkets. They can be local, regional, nationwide or global depending on the reach of the brand.

Chain stores are corporate owned, meaning that the parent company owns and operates all of the units. Moreover, all the profits or losses made by the units/chain stores are assumed by the parent corporation. In fact, they run daily operations, hire employees, and do everything from planning to tax.

What’s a Franchise?

Most successful businesses and corporations can offer franchising opportunities to willing and qualified investors. When a company sells franchises it’s called a franchise chain. In that case, a franchise location is owned and operated by an outside owner (franchisee). Franchisees must pay a small royalty fee (usually monthly or annually) and ongoing fees to the franchisor, as well as follow the business protocol and corporate policies set by the franchise company.

The guidelines that the franchisees must adhere to are clearly spelled out in a franchise agreement document called FDD. Each and every franchise location must stick to these guidelines unless indicated otherwise by the franchisor. These guidelines include operating procedures, opening hours, products allowed to be sold, and how & when pricing can be changed.

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