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An Introduction to Franchising
Franchising
* Franchising is a form of business organization in which a firm that already has a SUCCESSFUL product or service (FRANCHISOR) licenses its trademark and method of doing business to another business or individual (FRANCHISEE), in exchange for a franchise fee and ongoing royalty payment * International Franchise Association (IFA): “A franchise operation is a contractual relationship between the franchisor and franchisee in which the franchisor offers or is obliged to maintain a continuing interest in the business of the franchisee in such areas as know-how and training; wherein the franchisee operates under a common trade name, format and/or procedure owned or controlled by the franchisor, and in which the franchisee has or will make a substantial capital investment in his business from his own resources.” * Franchising is MORE than just distributorship because it extends to an ENTIRE operation or method of dong business, involves greater assistance, control and longer duration, whereas the distributor merely re-sells products to retailers or customers
Growth of Franchising
The word “franchise” comes from an old dialect of French and means privilege or freedom
Singer Sewing Machine - first franchise (mid 19th century)
Automobile - Ford, Petroleum Products - Shell, Softdrinks - Coca Cola, Food & Restaurants - McDonalds & Starbucks
Home markets became saturated, resulting in attractive opportunities overseas, paired with the expansion of int. trade and media
Lack of regulations in most countries

Types of Franchises Product & Trademark | Business Format | Management Franchise | An arrangement under which the franchisor grants to the franchisee the right to buy its products and use its trade name Here, the franchisee merely sells the franchisor’s products, including some form of

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