Essay On Franchisee

3386 Words14 Pages
What is a franchise?
An agreement or licence entered by two parties is known as a franchise. Franchising is a method that businesses use to market and distribute their products. The Franchisor gives rights to the Franchisee to market their brand or product by using their trademark, Franchisors also support Franchisees on an ongoing basis. There are two different types of franchising which are business format franchising and product and trade name franchising. Business Format franchising is when a franchisor offers the franchisee a package of deliverables and services which include the use of their logo and trademark and assistance with site location selection, hiring and training of staff, equipment, design and layout of the store etc. The franchisee has to pay a continuing fee in return for the packaging services that the franchisor is offering and sign a contract. Product and trade name franchising is when the franchisee doesn’t have to pay an ongoing fee
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The franchisee has to pay a franchise fee which is divided into two components which are initial franchise fee and ongoing franchise fee also known as royalties. An initial franchise fee is the joining fee and the money goes towards menus, training, drawing up of legal documents, planning etc. the ongoing franchise fee or royalties is the percentage of the turnover of the business contributed monthly and this fee enables the franchisor to continue giving support to the franchisee. The monthly percentage of turnover contributed also goes out to advertising contribution which is used towards national advertising. In order to become a famous brand franchisee an application form has to be downloaded from the web, the application form has to be completed and forwarded to famous brands limited through post or email. The application will be processed and if it is successful famous brands will send a list of sites available to open the
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