franchise

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Franchise

An agreement in which an entrepreneur buys a license to use another business' products, brand, proprietary knowledge, and trade secrets. This allows the entrepreneur to start a business without building up his/her own brand or products. This is a common way to start a business, especially in highly competitive industries. An industry that utilizes franchises on a regular basis is fast food; because of stiff competition, it is generally more profitable for one who wishes to start a fast food restaurant to buy a franchise.

franchise

1. An agreement between a firm and another party in which the firm provides the other party with the right to use the firm's name and to sell or rent its products. Selling franchise rights is a method of expanding a business quickly with a minimum of capital. See also franchisee, franchisor.
2. A right granted to another party by a government to engage in certain types of business. For example, a firm may obtain a government franchise to supply certain public services within a limited geographic region.

franchise

the granting by one company to another company (exclusive franchise) or a number of companies (non-exclusive franchise) of the right/s to supply its products. A franchise is a contractual arrangement which is entered into for a specified period of time, with the franchisee paying a royalty to the franchisor for the rights assigned. Examples of franchises include the McDonald Burger and Kentucky Fried Chicken diner chains, Tie Rack and Dyno-Rod.

Franchises are a form of co-partnership, offering mutual benefits. They allow the franchisor to expand sales rapidly and widely, sometimes on a global basis, without having to raise large amounts of capital, by building on the efforts of a highly motivated team of entrepreneurs. Individual franchisees are usually required to contribute the bulk of the investment in physical assets and hence have a personal interest in the success of the venture. For his part, the franchisee obtains access to an innovative product or novel selling method, with the franchisor providing back-up, technical assistance, specialized equipment and advertising and promotion. See VERTICAL MARKETING SYSTEM, BUSINESS STRATEGY, EXTERNAL GROWTH, BUSINESS FORMAT FRANCHISING.

franchise

the assignment by one FIRM to another firm (exclusive franchise) or others (nonexclusive franchise) of the right(s) to supply its product. A franchise is a contractual arrangement (see CONTRACT) that is entered into for a specified period of time, with the franchisee paying a ROYALTY to the franchisor for the rights assigned. Examples of franchises include the Kentucky Fried Chicken and MacDonald's burger diner and ‘take-away’ chains. Individual franchisees are usually required to put up a large capital stake, with the franchisor providing back-up technical assistance, specialized equipment and advertising and promotion. Franchises allow the franchisor to develop business without having to raise large amounts of capital.

franchise

(1) A contractual relationship whereby one party (franchisee) is entitled to use the trade name, image, procedures, and trade secrets of another (franchisor) usually in return for paying an initial purchase price and a percentage of gross revenues over the period of the arrangement. In most instances,there is a separate fee for the franchisee's share of national and regional advertising campaigns. Real estate franchises include Century 21, RE/MAX, and ERA. (2) A government grant of some privilege, such as the ability to operate as a corporation or the ability to sell drinks and sandwiches in the county courthouse.

References in periodicals archive ?
The drafting for the revisions to Article 142 also left uncertainties concerning the termination of franchise agreements.
The supervisors unanimously approved the franchise agreement with GTE Media Ventures Inc.
It is important to mention that, notwithstanding the foregoing, and except for the new authority granted to the Mexican Institute of Industrial Property to sanction franchisors in the event of a failure to make the abovementioned disclosure of specific information to the prospective franchisee, the scope of authority granted to the Mexican Institute of Industrial Property remains the same and, unless an additional amendment is approved in the future, such governmental institution should accept the franchise agreements filed for registration purposes without qualifying if the submitted document contains the new requisites provided in the amendments to the Industrial Property Law.
Lenny's Sub Shop today announced a franchise agreement that takes the quick-service restaurant chain into another new territory - Virginia.
International franchises often consist of area development agreements or master franchise agreements, with multiple units involved.
As at September 30, 2005, the Fund Network is comprised of 262 franchise agreements, operating from 561 locations serviced by 10,514 agents and 823 sales representatives.
can help you grow your system by making your franchise agreement more appealing to potential investors in non-traditional communities.
According to the Sept 05 Franchise Offering Circular, Mail Boxes Etc agreed to purchase his center for $5 million dollars, after the arbitrator in the case found the franchisor breached the franchise agreement and the covenant of good faith and fair dealings and violated the California Business and Professional Code and the Massachusetts Deceptive Trade Practices.
and The UPS Store franchisees whose franchise agreements contain similar clauses which the Court described as "unconscionable," and which the Court concluded would act to strip away the rights of franchise owners when disagreements arise.
The California Court of Appeals ruled the trial court had erred in dismissing a cause of action brought by MBE-branded franchisees against UPS for interfering with MBE-branded franchisees' franchise agreements.
Pink Sheets:OBDP), the leading public franchisor in the retail eBay drop-off store industry, commenced its franchising program and started sending UFOC's and Franchise Agreements to approved prospects last week.