The regional franchising represents a form of a franchising business organization in case of which the franchisee is entitled to develop a certain area and to control again opening companies (but at the same time there is a stipulated schedule for company openings and about their quantity). Firms newly opened in such a way, aren't endowed with an independent legal status, but are only branches or departments of the franchisee.
At the moment franchisees began to appear in many regions who possess not a single, but several franchises. Besides recently the regional franchising became quite a popular form of business. In many cases it was affected by the development of Chain Stores. Due to the global statistics, just conceptual shops have big efficiency in Russia.
Making his final choice on regional franchising, the businessman sets as an object to cover the determined geographical area by his business (city, region, country and etc.). At the same time he realizes that he has no necessary financial resources or a group of people which would help him only develop his own business by the expected growth rate. In connection with this, he needs a person whom he would be able to rely on. And that person becomes the main franchisee who is endowed with the definite rights and obligations.
On the one hand he can himself choose a new franchisee on his trusted area, on the other hand he carries out original curriculum among beginners and holds other events which are usually done by franchisor. And at last, he makes use of all blessings inherent to franchising, for which he should make license payments and should pay royalties immediately to his franchisor.
A complete contract is made between the main franchisee and franchisor in which all rights and obligations of both sides are depicted in detail, the period during the franchisee will lead this activity is also specified.
At the starting point the main franchisee pays license payments to his franchisor for using that kind of business, and subsequently begins to receive royalty. The growth of payment strictly depends on the activity of beginners assigned into franchising system.
This method of co-operation is profitable for both sides of franchising system.