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Franchising Research Paper

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An

Introduction to

Franchising

Sponsored by:

IFA EDUCATIONAL
FOUNDATION

© 2010 The IFA Educational Foundation. All Rights Reserved. No part of this book may be reproduced or transmitted

in any form, by any means (electronic, photocopying, recording or otherwise), without the written permission of the publisher. IFA Educational Foundation, 1501 K Street, NW, Washington, DC 20005, (202) 628-8000, www.franchise.org.

An

Introduction to

Franchising
IFA EDUCATIONAL FOUNDATION

Sponsored by:

By Barbara Beshel

CHAPTER

1

1.
2.
3.
4.

5.

An Introduction to Franchising

What is a franchise?
What are common franchise terms?
What are the alternatives to franchising?
What are the advantages and disadvantages of owning a franchise?
What are the legal issues in franchising?

WHAT IS A FRANCHISE?
A franchise is the agreement or license between two legally independent parties which gives:
• a person or group of people (franchisee) the right to market a product or service using the trademark or trade name of another business
(franchisor)


the franchisee the right to market a product or service using the operating methods of the franchisor



the franchisee the obligation to pay the franchisor fees for these rights



the franchisor the obligation to provide rights and support to franchisees

FRANCHISE AGREEMENT
FRANCHISOR

FRANCHISEE

Owns trademark or trade name

Uses trademark or trade name

Provides support:
• (sometimes) financing
• advertising and marketing
• training

Expands business with franchisors support

Receives Fees

Pays Fees

THE IFA EDUCATIONAL FOUNDATION

AN INTRODUCTION TO FRANCHISING 5

TYPES OF FRANCHISES
PRODUCT DISTRIBUTION
Product distribution franchises simply sell the franchisor’s...

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