Zongqing Zhou, PhD

| College of Hospitality and Tourism Management

 
     
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The Differences between Franchising and Management Contract

The term "franchising" is used to describe a wide variety of business systems which mayor may not fall into the legal definition provided above.
The Franchise Company and Management Company have much in common. Both sell intangibles and both earn fees from those sales.

The management company is paid for its managerial skills, the franchisor for the right to use its name, its reservation system and

its operational investments. When business was poor, franchise and management companies took fees up front and

the hotel owner stood the losses or profits. The franchisee gets influences from affiliating with a big company, but retains

the rights of an independent businessperson. Management contracts involve not just selling a method of doing things (as with franchising or licensing)

but involves actually doing them. A management contract can involve a wide range of functions, such as technical operation of a production facility,

management of personnel, accounting, marketing services and training. Property manager relations with Tenants gives a face to the Landlord and

provides them the necessary bumper servicing their desire to profit and distance themselves from their tenant community.