Franchising is a long-term cooperative relationship between two entities—a franchisor and one or more franchisees—that is based on an agreement in which the franchisor provides a licensed privilege to the franchisee to do business. The franchisor grants the franchisee the right to use a developed concept, including trademarks and brand names, production, service and marketing methods and the entire business operation model, for a fee. The franchisee then provides the time, capital, and desire to utilize the brand and services provided by the franchisor to build a thriving business.
The product, method or service being marketed is usually identified by the franchisor's ...view middle of the document...
The ability to compete, hold a strong place in the market and position the company accordingly, can be achieved by the employment of franchising. This system has an extremely successful track record and allows the user to ensure the company’s prosperity and carry it confidently into the future. One of the principal tactics in doing business in today’s current environment, particularly for SMSs, is franchising. This method has been improved ever many years through trial and error and has become a clear concise process.
In our country we see a numerous types of business and also numerous brand names. As a developing country we can hardly consume the most updated product from branded companies. International trade especially franchising helps in this respect by serving different reputed branded product at our doors.
While working with our Franchising companies we have found many points that must be noted. In our country we do not have any established law about franchising. Besides, there is no separate governing body that regulates these sorts of businesses. So, here the franchisees have to bind with each and every term and conditions set by the franchisor.
On the mirror view the franchisor may faces a lot of risks while they permit for franchising here. Often different companies are seemed to contract for everything but violets some major principles set by the franchisor. Sometimes they sacrifices quality, size of the product to earn higher return. Sometimes franchises cares very little about the franchisors’ reputation. But reputation or brand is one of the most important assets for the franchisors. This all happen because of the lack of our legal guidance.
Bureaucracy also hinders the way for this sort of investment decisions.
A franchise is a right granted to an individual or group to market a company’s goods or services within a certain territory or location. The International Franchise Association (IFE) defines a full business format franchise as – “A franchise operation is a contractual relationship between the franchisor and the franchisee in which the franchisor offers or is obliged to maintain continuing interest in the business of the franchisee in such areas as know-how and training, wherein the franchisee operates under a common trademark, format or procedure owned or controlled by the franchisor, under which the franchisee has or will make a substantial capital investment in his business from his own resources.”
Some examples of today’s popular franchises are McDonald’s, Subway, Domino’s Pizza, and the UPS Store. Many people associate only fast food businesses with franchising. In fact, there are over 120 different types of franchise businesses available today, including automotive, cleaning & maintenance, health & fitness, financial services, pet-related franchises etc.
The franchise contract
A franchise contract refers to a legal contract in where a well established business consents to provide its brand,...