Franchising Is A Major Driver Of Business Development And Franchisor Brand Equity

843 Words Apr 17th, 2016 4 Pages
According to Hill, Jones, and Schilling (2015), franchising is a strategy in which the franchisor or the founding company grants the franchisee, the purchasing company, the right to use the franchisor’s name, reputation, and business model in return for a fee and often percentage of the profit. The business must operate under strict guidelines, follow the rules, regulations, and standards given by the founding franchisor (Hill, et al 2015, p. 182). In return this creates a business relationship between the two. According to Ribeiro, D., & Akehurst, G. P. (2014) franchising has become a major driver of business development and franchisor brand equity is a critical factor with a clear impact on the perception and behavior of the franchise. Franchises brings together independent companies and establish agreements between two parties.
Hill, et al, (2015), states that typically, franchisees must adhere to some strict rules which governs how to do business. The franchisor requires them to take the same basic business model and run in a certain manner. They must have the same basic look, operate in a certain way, feel, offering, pricing and business processes as other. The founding business assists the franchisee and typically receives a percentage of the revenues (Hill, et al 2015, p. 182).
On the other Ribeiro, et al (2014), believes that in order for a franchisee to commence first, there is a market relationship in which franchisor and franchisee attempt to maximize…

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