Antitrust Law And Economics Of Product Distribution

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Introduction This Literature review explains if a franchise is high or low risk way of entering into a market. It also explains whether a franchisee is suited for a certain franchise. Franchises can be seen all over the world, with everyone being introduced to them, as consumers, from a young age (Longenecker et al., 2011). Thomas and Seid (2000) agree with this and believes due to it, people think they understand a lot more about a franchise than they actually do, creating myths about the rate of success and the ease of entry. Antitrust Law and Economics of Product Distribution (2006, p.5) defines a franchise in a 3 part way as, “(1) a franchisee (a) offers, sells or distributes a franchisor’s goods or services, which are identified by…show more content…
Many years later, franchising became more entrenched in the UK with the advent of the tied pub system. Following the introduction of legislation making it very expensive to keep and maintain a public house in the 18th century, licensees began to struggle to operate successfully. Recognising that it was in their interests to have a secure and stable market for their products, brewers began to offer publicans the opportunity of financial support in return for exclusivity over what was sold in the pub. Thus a familiar system, that remains widely-used in the licensed trade today, was born.” (Thebfa.org, 2015) Types of Franchises There are three types of franchises; these are business format franchises, product franchise and manufacturing franchises (Referenceforbusiness.com, 2015). Business Format Franchise Business Format Franchises are the most common out of the three, this franchise gives the right for entrepreneurs to use their name and product. The franchisee usually benefits from the assistance given by the franchisor, but has to pay fees and royalties over the franchise contract. The most noticeable example of this type of franchise is McDonalds, which is one of the most successful companies in the world (Referenceforbusiness.com, 2015). Product Franchise In this kind of franchise the

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