Essay On Franchising

A franchise is a legal agreement between franchisers and franchisees that consents use of the franchise’s trademark and trade name or marketing plan

Franchising is a business model that allows companies to rapidly expand their market share. According to Franchise.com (2015), there are three types of franchises: distributorships, trademark licensing, and business format franchises. When two organizations enter into a distributorship, the originating company provides the rights another company to sell their products. An example of a distributorship is when an auto manufacturing company grants rights to a dealership to sell their vehicles (Franchise.com, 2015). Trademark licensing is when one company allows another company to use their trademark (Franchise.com, 2015). The business format franchise authorizes franchisees to sell the parent company’s products and/or services as well as utilize their business model. This type of franchising is the most common and is the type needed to obtain to open a new Cold Stone Creamery.

Franchise means “privilege” or “freedom” and the word originates from an old French dialect. The history of franchising can be traced back to the Middle Ages (476 A.D. – 1453 A.D.) when kings granted franchises to specific people or groups to perform a certain type of commercial activity or hunt on their land. German breweries in the 1840s also used franchising to distribute their beer to different geographic areas. The breweries granted the franchises to certain taverns to be the sole distributor of their beer in a specific area. Isaac Singer was known to pioneer the use of written franchise agreements. In the 1850’s, Isaac Singer started granting franchises for its sewing machines because he wanted to distribute his sewing machines to customers

Franchising is simply a method for expanding a business and distributing goods and distributing goods and services through a licensing relationship. In franchising, franchisors not only specify the products and services that will be offered by the franchisees, but also provide them with an operating system, brand and support. (Franchise.org, 2016)

Franchising: it is a relationship in which the owner of the business allocates to independent individuals the right to market and deal out the goods or service, and by using the business’s name for a fixed period of time. ".

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& Wang, Y. (2012) narrated that franchising is quite similar with licensing but comprises long-term commitments whereas licensing comprises short-term commitments. Franchising is a right that a parent company gives to other business by allowing to do specific company activities such as selling product or service with the name of parent company, for example McDonalds and Starbucks Coffee. A company selling franchise receives royalty payment related to franchisee's revenue. Parent company avoids many costs and risks of opening in a host country. A company using franchise entry mode can build great market place all over the world within short time at relative low risk and

Franchising refers to the steps of exercising and using another’s completed business concept. In relationship with franchise, the franchisee is permitted the right to market a product or a service under a marketing plan or a system that applies the name, trademarks and ads owned by the franchisor.

To begin with, the concept of “franchising” originally appeared in Britain in the 10th century and as a term described a variety of benefits, which were provided to the citizens in the context of the electoral process. However, the revival of franchising as a modern business institution is marked by the year 1840, the year of the appearance of the first worldwide franchise network (the system of “tied pubs”) in the UK, which was used by the brewers in order to maintain the necessary volume of sales. In fact, the “tied pubs system” operated in accordance with the following principle: in exchange for a loan or rental property a brewer was provided with an inn, that is, with the possibility to sell beer and alcoholic beverages (Lashley & Rowson, 2002). At this point, it should be noted that the abovementioned system still exists these days, which illustrates the effectiveness of such type of business.

Franchising is a type of business in which a business grants the other business the right to use the brand name, business systems and processes in order to produce goods and services according to certain specifications. The party which gives out the rights to the other party to use their name is called the franchisor and the party purchasing the rights of the other business to use their name is known as the franchisee. Franchising is a type of a license given by the franchisor to the franchisee in order to allow the franchisee to sell goods and services under the name of the franchisor; the franchisee pays a certain amount of fees to the franchisor to buy their license. Franchising is one of the most popular methods in the world today to do

Francize is the contract established between a franchisor and a franchisee. Franchisor is a contract that gives franchisee the right to use his or her trademark, trade name, or the right to lease or sell the product, and receives the appropriate commission accordingly. These contracts are a way to rapidly expand business with minimal capital. A legal right that government authorities have granted to companies and individuals to perform certain economic functions. For example, in a limited area, a company has the right to supply joint services. The franchise is emerging as one of the important business in this modern society and has spread quickly in many countries. The franchise is also spreading rapidly in the Vietnamese industrial society. Pizza2go is one of the examples of franchises in the Vietnam. Pizza2go has over 50 retail stores and has huge number of pizza menu with more than 2,000 options.

Franchising can be defined as a business venture between an individual (Franchise Owner) and the franchisor (Business Owner), who wants to expand the scale of their business to promote visibility of their particular brand and thus increase market shares. In India, franchising is growing exponentially over the last handful of decades along and the trend seems to be growing at an extremely strong pace. According to the experts, franchise business is probably the safest modes of businesses because it involves lesser investment with greater ROI. That's why increasing numbers of people are actually moving on the lucrative world of franchising.

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

In a franchise, the Franchisor sells the rights to sell its proprietary good/service to third parties or Franchisees. Both of the parties then sign a franchise agreement, which lasts for any agreed period, but generally between, 5 and 30 years. Once the franchise commences to function the Franchisee pays a royalty payment has to the franchisor on a monthly, quarterly or annually basis. The franchisor does not have liability and is not responsible for any activity in the franchisees business and does not have any employment liability, and are not responsible for any of the on job injuries in the franchisees business.

Advantages & Disadvantages of Franchising Franchising is ‘a continuing relationship in which the franchisor (the owner of a company) provides a licensed privilege to the franchisee (the buyer) to do business and offers assistance in organising, training, merchandising, marketing, and managing in return for a consideration. It is a form of business by which the franchisor of a product, service, or method obtains distribution through affiliated dealers (franchisees).’ (http://www.business.gov) A franchise is essentially a replica of an existing business. When you purchase a franchise, you buy the rights to use the parent company's name and to sell its product or service in exchange for an up-front franchise fee and ongoing royalties, which