franchise

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Related to Franchise system: Franchise agreement

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 ?
We plan to be the first when we partner with the right veterinarian, or group of veterinarians, to launch and scale this franchise system," Murphy added.
IFA members believe that a franchise system should be committed to help its franchisees succeed, and that such efforts are likely to create value for the system and attract new investment in the system.
Smith, chairman and CEO of Cendant's Real Estate Services Division, said) We now look forward to building and operating a franchise system that will add significant value to those residential real estate brokerage firms who will becomes, franchisees of Sotheby's Intemational Realty.
I think we've done a very poor job of explaining to people what the franchise system is because it's definitely being promoted in other groups as some kind of exclusive club,'' Rahal said.
The Paketeria franchise system combines seven services (post and parcels, Internet pharmacy, e-bay dropshop, copies, printing, photo processing and printer cartridge refilling) in one store.
Thousands of franchise systems vie for the Franchise 500, which evaluates all companies, regardless of size, by the same criteria: objective, quantifiable measures of a franchise system.
Franchisors should start by looking for a segment of the health-care industry in which the franchise system has the ability to improve patient outcome.
A partner with three of the top five processors, FPN gives its franchise clients the flexibility to customize a solution that best suits the needs of the franchise system.
Additionally, this release may not be considered as legal, accounting, or investment advice, and is not, and may not be considered, a solicitation for the purchase of any securities issued by Obee's Franchise System, Inc.
As each of you know from your own experiences, the size and scope of each franchise system can range from a handful to a few hundred.
Within the same line of business, and even within the same franchise system, there are so many variables due to location, market size, population and economic changes that many franchisors are reluctant to provide a "crystal ball" view of future unit performance.