- "Franchising is based on a marketing concept which can be adopted by an organization as a strategy for business expansion."
Understand the relationship between the franchisee and franchisor, including communication channels, reporting requirements, and conflict resolution.
Franchise Agreements: A legal contract that outlines the terms and conditions of the franchise relationship between the franchisor and franchisee.
Franchise Disclosure Document (FDD): A document that provides detailed information about the franchise company, including its history, financials, and obligations of the franchisor and franchisee.
Franchise Fees: The costs associated with starting and maintaining the franchise, including initial fees, ongoing royalties, and advertising fees.
Training and Support: The training and support services provided by the franchisor to the franchisee to ensure the success of the franchise.
Branding and Marketing: The branding and marketing strategies used by the franchisor to promote the franchise and attract customers.
Territories and Exclusive Rights: The geographic territories and exclusive rights granted to the franchisee, which restrict competition from other franchisees of the same brand.
Product and Service Standards: The product and service standards that the franchisee must uphold to ensure consistency and quality within the franchise brand.
Quality Control and Inspections: The quality control and inspection procedures used by the franchisor to ensure the franchisee follows the standards set by the brand.
Franchisee Obligations and Restrictions: The obligations and restrictions that the franchisee must adhere to, including product sourcing, marketing guidelines, and operating procedures.
Termination and Renewal: The conditions that govern termination of the franchise agreement, including causes for termination and renewal options, if any.
Single-Unit Franchise: The most common type of franchise relationship, in which a franchisee owns and operates a single franchise location under the franchise agreement.
Multi-Unit Franchise: A franchisee who owns and operates multiple franchise locations under a single franchise agreement.
Area Development Franchise: A franchisee who has the right to develop a specific geographic territory for a franchisor, opening and operating a certain number of units within a specific timeframe.
Master Franchise: A franchisee who has the right to develop and manage an entire region or country, sub-franchising the brand to other franchisees within that region or country.
Sub-Franchise: A franchisee who operates under a master franchise agreement, in which the franchisor licenses the master franchisee to sub-license the brand and system to other franchisees within a specific geographic territory.
Joint-Venture Franchise: A business partnership between a franchisor and franchisee, in which both parties share ownership and control of the franchise.
Corporate Franchise: A franchise that is owned and operated by the franchisor, rather than an independent franchisee.
Conversion Franchise: A franchisee who converts an existing business into a franchise, typically through a conversion program offered by the franchisor.
Equity Franchise: A franchisee who invests in the franchisor's company, typically through the purchase of stock or ownership shares.
Area Representation Franchise: A franchisee who represents the franchisor in a specific geographic territory, typically responsible for finding and recruiting new franchisees within that territory.
- "A franchisor licenses some or all of its know-how, procedures, intellectual property, use of its business model, brand, and rights to sell its branded products and services to a franchisee."
- "The franchisee pays certain fees and agrees to comply with certain obligations, typically set out in a franchise agreement."
- "Adopting a franchise system business growth strategy for the sale and distribution of goods and services minimizes the franchisor's capital investment and liability risk."
- "Franchising is rarely an equal partnership, especially in the typical arrangement where the franchisee is an individual, unincorporated partnership or small privately-held corporation, as this will ensure the franchisor has substantial legal and/or economic advantages over the franchisee."
- "The usual exception to this rule is when the prospective franchisee is also a powerful corporate entity controlling a highly lucrative location and/or captive market."
- "Under specific circumstances like transparency, favorable legal conditions, financial means, and proper market research, franchising can be a vehicle of success for both a large franchisor and a small franchisee."
- "Thirty-six countries have laws that explicitly regulate franchising."
- "The majority of all other countries have laws which have a direct or indirect effect on franchising."
- "The word franchise is of Anglo-French derivation—from franc, meaning 'free'—and is used both as a noun and as a (transitive) verb."
- "For the franchisor, use of a franchise system is an alternative business growth strategy, compared to expansion through corporate owned outlets or 'chain stores'."
- "The franchisee pays certain fees and agrees to comply with certain obligations, typically set out in a franchise agreement."
- "Franchising is also used as a foreign market entry mode."
- "A franchisor licenses some or all of its know-how, procedures, intellectual property, use of its business model, brand, and rights to sell its branded products and services to a franchisee."
- "Adopting a franchise system business growth strategy for the sale and distribution of goods and services minimizes the franchisor's capital investment and liability risk."
- "This will ensure the franchisor has substantial legal and/or economic advantages over the franchisee."
- "Transparency, favorable legal conditions, financial means, and proper market research are specific circumstances that can lead to successful franchising."
- "Franchising is rarely an equal partnership, especially in the typical arrangement where the franchisee is an individual, unincorporated partnership or small privately-held corporation, as this will ensure the franchisor has substantial legal and/or economic advantages over the franchisee."
- "Adopting a franchise system business growth strategy for the sale and distribution of goods and services minimizes the franchisor's capital investment and liability risk."
- "Prospective franchisors must then compete to exclude one another."