Franchising - Class XI

Under a franchise, the owner (franchisor) retains control of the brand and licenses (that is, grants permissions to) the franchisee to use its successful business model and brand. Licensing of intellectual property (IP) is at the heart of a franchise contract. So, in fact, a franchise includes licensing.

Franchising is based on a marketing concept which can be adopted by an organization as a strategy for business expansion. Where implemented, a franchiser licenses its know-how, procedures, intellectual property, use of its business model, brand, and rights to sell its branded products and services to a franchisee

Franchising is based on a marketing concept which can be adopted by an organization as a strategy for business expansion. Where implemented, a franchiser licenses its know-how, procedures, intellectual property, use of its business model, brand, and rights to sell its branded products and services to a franchisee. 

There are five key characteristics that, more than any others, determine success as a franchisee. They are Any business start-up involves some risk of failure, but a strong franchise with a proven track record of success will minimize this risk.

Arrangement where one party (the franchiser) grants another party (the franchisee) the right to use its trademark or trade-name as well as certain business systems and processes, to produce and market a good or service according to certain specifications. The franchisee usually pays a one-time franchise fee plus a percentage of sales revenue as royalty, and gains 

A franchise is a business opportunity that allows the franchisee to start a business by legally using the franchiser's expertise, ideas, and processes. This helps the franchiser to grow his business in the market and increases the goodwill of the franchiser.

The payment of royalty is the payment made by the franchisee to the franchiser in a regular basis for him to let the franchisee run a business with his established goodwill, trademark and processes.

The franchiser allows the franchisee to use his trademark under a license to start a business franchise and its processes.

The franchisee has started with an established business of the franchiser an enjoys exclusive rights in his territory of business.

Disadvantages of franchising. Costs may be higher than you expect. As well as the initial costs of buying the franchise, you pay continuing management service fees and you may have to agree to buy products from the franchisor. The franchise agreement usually includes restrictions on how you can run the business.

Franchising is a common form of privatization in utility and transport services, where a private entity is granted the right to operate a service for a specific period.

Franchising is a more advantageous entry mode as it helps in expansion of business and also generates economies of scale and also offers greater control to an organisation at a low risk and at low cost.

Yes, franchiser helps the franchisee on setting up a business as it provides know-how, training to the franchisee regarding its business and also give him the rights to sell its products in the market.

• Franchising is a “form of licensing in which a parent company (the franchisor) grants another independent entity (the franchisee) the right to do business in a prescribed manner. This right can take the form of selling the franchisers products, ‘using its name, production and marketing technique, or general business approach.” Donald W. Hackett
  
• Franchising is the practice to use the another firm's successful business model.
  
• The franchiser provides training and continuous assistance to the franchisee.
• Franchiser need not share all business and trade secrete with franchisee.

Franchising is a form of business by which the owner (franchisor) of a product, service or method obtains distribution through affiliated dealers franchisees. If buying an existing business doesn't sound right for you but starting from scratch sounds a bit intimidating, you could be suited for franchise ownership.

Franchising is a method of expansion for an established and successful business looking to grow a network. It can also help businesses to expand both nationally or internationally, strengthen the brand and reach of a company and act as a good method of securing its future but only if it's done well.

Franchising is based on a marketing concept which can be adopted by an organization as a strategy for business expansion. Where implemented, a franchiser licenses its know-how, procedures, intellectual property, use of its business model, brand and rights to sell its branded products and services to a franchise. for example Mc Donald, KFC etc.

Salient features of franchising are  

1. Well established business.
2. Needs limited investment. 
3. Easy entry in new markets.
4. Business has large establishments.
5. Helps in diverting business risks.
6. Results in a large turnover.
7. Separates labor and specialization.
8. Allows use of brand name and trademark.

Franchising is basically a specialised form of licensing in which the franchiser
not only sells intangible property (normally a trademark) to the franchisee, but
also insists that the franchisee agrees to abide by strict rules as to how it does
business.

• Franchising is a term used in connection with the provision of services. McDonalds, for instance, operates fast food restaurants the world over through its franchising system.
• Franchising is a “form of licensing in which a parent company (the franchiser) grants another independent entity (the franchisee) the right to do business in a prescribed manner. This right can take the form of selling the franchisers products, ‘using its name, production and marketing technique, or general business approach.” Donald W. Hackett

Franchise agreements can last for periods as short as three years and as long as 20. Franchise Association Franchise Survey 2010 reports that franchise agreements in the UK are predominately for a fixed term of five years, with rights to renew at the end of the term.

Disadvantages of Franchising are as follows:

• Licensing is a contractual arrangement in which one firm grants access to its patents, trade secrets or technology to another firm in a foreign country for a fee called royalty.
  
• The firm that grants such permission to the other firm is known as licensor and the other firm in the foreign country that acquires such rights to use technology or patents is called the licensee. 
  

A BRIEF HISTORY OF FRANCHISING The History and Evolution of FranchisingThe word “franchise” is derived from the Anglo-French word meaning “liberty.” In Middle French, it is “franchir” to free. In Old French, it is “franc,” signifying free. The French term “francis” means granting rights or power to a peasant or serf.

Franchising is a form of direct marketing where the customers become distributors as a customer asks for the franchise from the franchiser to grow his business.

Because A Franchise Agreement is a legal, binding contract between a franchisor and franchisee. In the United States franchise agreements are enforced at the State level. Prior to a franchisee signing a contract, the US Federal Trade Commission regulates information disclosures under the authority of The Franchise Rule.

1. capital injection is an investment of capital into a company or institution, generally in the form of cash, equity, and debt
   
2. Market penetration refers to the successful selling of a product or service in a specific market.
   
3. Risk Sharing is an entirely different concept. It involves sharing (dividing) common risk among two or more persons
   

Franchising is an organizational form based on a legal agreement between an International franchisor to give standardization that is the process of implementing and developing technical standards based on the consensus of different parties that include firms, users, interest groups.

A royalty is a payment made by one party, the licensee or franchisee to another that owns a particular asset, the licensor or franchisor for the right to ongoing use of that asset.

A franchisor is a person or company that grants the license to a third party for the conducting of a business under the franchisor's marks. The franchisor owns the overall rights and trademarks of the company and allows its franchisees to use these rights and trademarks to do business.

Franchising is based on a marketing concept which can be adopted by an organization as a strategy for business expansion. Where implemented, a franchiser licenses its know-how, procedures, intellectual property, use of its business model, brand; and rights to sell its branded products and services to a franchisee.

 franchising the business, the franchisor places the expansion of his/her business in the hands of people who are motivated to make it work.