Chapter 1 Th e World of Hospitality 13
where business transactions take place and pay-
roll records are kept. A single-unit business is also
called an independent business. An independent
business is not connected legally or by contract to
any other business. The owner of an independent
business is responsible for all business decisions
and does not need to follow any other guidelines.
(Of course, all businesses must follow local, state,
and federal laws.)
An example of an independent business is
Amore’s Italian Restaurant, owned by Antonio
Amore. He came to the United States in 1984 from
Milan, Italy, and had a dream to open his own res-
taurant specializing in authentic Italian food. He
uses his mother’s recipes for most of the menu
items. Antonio makes all the decisions about the
restaurant. He decides on the decor, what menu
items to serve, what to charge, and what the serv-
ers will wear.
Multiple Unit
A multi-unit business has two or more estab-
lishments. These units function as part of a chain or
part of a franchise. The business itself may consist of
a chain of units, franchised units, or a mix of both.
Chain
A chain is a business that has more than one
establishment under the same name and the same
ownership. For example, suppose Antonio Amore
decides to open two more Amore restaurants.
Amore’s would now be a chain. An example of a
restaurant chain is the Olive Garden Restaurants.
All 780 Olive Garden Restaurants are owned by a
company called Darden Restaurants, Inc. This is
the largest casual dining restaurant company in
the world, employing more than 185,000 people.
Employees at Darden’s headquarters in Orlando,
Florida, make all the decor, menu, and customer-
service decisions for the restaurants.
The most important aspect of a chain is its
name, which becomes its brand. A brand is a
name, logo, tagline, or any combination of these
that distinguishes a product from its competitors,
1-12. When customers see the brand, they associate
a certain product and type of service with that par-
ticular brand. For example, McDonald’s is a chain
restaurant. The McDonald’s brand consists of the
McDonald’s name, The Golden Arches (a logo),
and the tagline “I’m lovin’ it.” Wherever people
see the McDonald’s brand, they know exactly
what they will get. The McDonald’s brand tells
the customer that he or she will get McDonald’s
selections in a clean restaurant with quick service.
Another example is the Four Seasons luxury hotel
chain. When customers see a hotel with the name
Four Seasons, they expect to fi nd a luxury hotel.
Franchise
The second type of multi-unit business is the
franchise. A franchise is the right to do business
using the brand and products of another business.
The term franchise also refers to the business that is
set up. Opening a new business unit takes a great
deal of money. Sometimes the chain owner does
not have enough money to open another unit.
However, someone who is outside the chain might
want to open a unit of the chain. The chain owner
can give that outside person the right to use the
chain’s name and sell the chain’s products.
The legal document that sets up a franchise
is called a franchise agreement. The franchise agree-
ment includes the rules and standards that the
outside person must follow in running the fran-
chise. In exchange for the right to use the chain’s
brand name and sell the chain’s products, the out-
side person pays a certain amount of money to the
chain owner. This money is called a franchise fee,
which is also stated in the franchise agreement.
The person who owns the chain and the brand
is called the franchisor. The person who buys the
right to use the brand is the franchisee. The fran-
chisee actually owns the franchise business, but is
connected legally by the franchise agreement to
the franchisor. All franchises are part of a chain,
but not all chains have franchises.
For example, suppose that Antonio Amore
wants to expand his business. Suppose Mary
Green wants to open an Italian restaurant. Anto-
nio can decide to grant a franchise to Mary. Anto-
nio is the franchisor. Mary is the franchisee. The
franchise agreement would say that Mary may
open a restaurant called Amore’s, using Antonio’s
Romano’s Macaroni Grill
1-12
This logo helps brand Romano’s Macaroni
Grill, a casual dining restaurant.