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 ?
"Our compliance review identified that some franchisors are making it difficult to contact former franchisees by failing to disclose basic information such as email addresses or mobile phone numbers."
How do you ensure that you as the franchisor are doing everything possible to make the licensee successful so that your franchise can realize the full financial potencial of a country?
Franchisors do not allow applicants to talk to current franchisees-It is best that applicants talk to existing franchisees about their experiences.
Many franchisors hoping to secure multi-outlet commitments will look to identify a single franchisee which will be able to commit to a schedule of expansion throughout the GCC.
If the franchisee agrees to shut down all the relevant existing F and B brands that conflict with the franchisor 's brand, the franchisor also demands that the CEO of the franchisee's company must hold the citizenship of the country where the brand is to be set up to attend a fair-period of training at the franchisor 's institute.
Franchising means using a tried and tested formula to benefit from the experience and support of the franchisor (the company offering the franchise).
Problem: Franchisor B has a lack of local visibility on Internet search engines that allows obscure, mom-and-pop shops to enjoy revenue opportunities meant for your local franchisees.
Franchisors should be aware generally that the revised rules change their disclosure requirements in the following areas:
Franchisors who have made mistakes can start by identifying what has and has not worked in their franchise systems and determine what makes an 'ideal franchisee' in that context.
One key advantage that franchisees get from joining a franchise system is the business expertise provided by the franchisor. The advantage of the franchisor's expertise is, however, not lasting (Oxenfeldt & Kelly, 1968-69).
Investment in IT allows franchisors to have greater access to information such as stock control and accounts.
Already one third of all franchisors in this country have a presence on the continent, while those that don't are planning an advance on Western Europe.