Franchising

related topics
{company, market, business}
{law, state, case}
{game, team, player}
{math, number, function}
{theory, work, human}
{day, year, event}
{area, community, home}
{system, computer, user}
{build, building, house}
{food, make, wine}
{service, military, aircraft}

Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-french derivation - from franc- meaning free, and is used both as a noun and as a (transitive) verb.[1]

For the franchisor, the franchise is an alternative to building 'chain stores' to distribute goods and avoid investment and liability over a chain. The franchisor's success is the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.

However, except in the US, and now in China (2007) where there are explicit Federal (and in the US, State) laws covering franchise, most of the world recognizes 'franchise' but rarely makes legal provisions for it. Only Australia, various provinces within Canada, France and Brazil have significant Disclosure laws but Brazil regulates franchises more closely.

Where there is no specific law, franchise is considered a distribution system, whose laws apply, with the trademark (of the franchise system) covered by specific covenants.

Contents

Overview

Businesses for which franchising works best have the following characteristics:

  • Businesses with a good track record of profitability.
  • Businesses which are easily duplicated.

As practiced in retailing, franchising offers franchisees the advantage of starting up quickly based on a proven trademark, and the tooling and infrastructure as opposed to developing them.

Although there are franchises around products – Chanel and other cosmetics, to name the prominent – by and large, the franchises revolve around service firms. At the sub-$80,000 level, they are, by far, the largest number of franchises.[2] These allow a business, combined with family time and a location not far from home. Some franchises are available for a few thousand dollars.

Full article ▸

related documents
Standard Oil
Economy of Morocco
Economy of Afghanistan
Economy of Oman
Deregulation
GTE
Economy of Haiti
Economy of Estonia
Import substitution industrialization
Enron
Economy of Singapore
Economy of Zambia
Economy of Uzbekistan
Economy of Moldova
Royal Dutch Shell
IKEA
Bond (finance)
Economy of Peru
Planned economy
Economy of Bangladesh
Stock exchange
Bank of Credit and Commerce International
Economy of the United Kingdom
Big Four auditors
Economy of Bahrain
Initial public offering
Economy of Sudan
Telenor
Economy of Eritrea
Borland