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 survey is the fourth annual SUCCESS/Ernst & Young Gold 100 and for the first time this year's survey reflects the financial sophistication of the Big Six accounting firm Ernst & Young, which includes information and responses from franchisees as well as franchisers and scores the effectiveness of services provided by the franchisers.
DVDPlay is the manufacturer and franchiser of Automated Entertainment Machines (AEMs) that enable consumers to conveniently rent or purchase DVD movies wherever they shop, work or play and franchise owners to manage their AEMs remotely 24/7.
First, in the quality of corporate management; second, in order of number of units and third, broken into four categories based on the size of investment you'll need to buy and open a franchise, the growth record of the franchiser, the support provided to the franchisees from the franchisers organization and finally, the appeal to attract loyal customers.
Daniel Harrow, Managing Director of Restructuring Services at Seidler, said the regional owners of Fantastic Sams have suffered in recent years as owner after owner of the master franchiser, in this case Opal Concepts, has failed financially.
in 1964, Blimpie International has become the franchiser of a chain with approximately 2,000 outlets in the United States and 15 foreign countries.
The largest franchiser in the quick printing industry, FSI owns Sir Speedy, PIP, MultiCopy, Digital QuickColor and Summit Marketing.
Milwaukee-based Marcus Corporation is a leading management company and franchiser of 185 hotels and resorts.
Jiffy Lube, a wholly owned subsidiary of Pennzoil-Quaker State Company, is the world's largest fast lube operator and franchiser.