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 ?
Whether these purposes have truly been achieved, however, will depend on the success franchisees have in asserting their rights and remedies under the new Act.
Additionally, recent British Columbia Human Rights Tribunal decisions demonstrate that franchisors who exercise control over their franchisees may be liable for their franchisee's breach of human rights legislation.
A: There is a common misconception that franchisees can be successful by themselves.
That's because franchisees have a relationship with Golden Corral that is like that of partners who share in and contribute to each other's success.
The court found no authority to support the contention that as a matter of law a subsequent franchisee may not amortize an amount greater than the franchise fee charged to the original franchisee.
Existing multi-unit franchisees understand the brand, the product, the systems and process, and bring operational expertise to the table - all the tools they need to be successful operators.
"This error of one will strengthen the whole chain in that new measures will be put in place to make each franchisee a better corporate citizen," it added.
The franchisee is granted only the right to operate from an approved location, and the franchisor reserves its rights to locate a unit at any location, "as franchisor, in its sole and exclusive discretion, deems appropriate."
"On going training, vendor exhibits, and camaraderie at SIGN-A-RAMA's annual, industry-famous EXPO keep our franchisees current about everything in the quick-sign business," Wheeler adds.
A detailed operations manual outlines your day-to-day processes and procedures, and provides a proven process to aid franchisees in their own success.
Franchisors are advised to reexamine reasons for franchising and be committed to the success of franchisees.