Introduction to Franchising

Introduction to Franchising

Who haven’t thought of owning your own business or franchise. In the current unsure economical and political climate many clear headed people have decided that it is in the best interest of themselves and their families to start their own business.

You might argue that this is a big step and a risk, irrespective if this is for yourself or a wife / husband or a child. It is for that reason the owners of a Franchise decide to put their business knowledge, knowledge of the specific industry and skills together through the concept of a franchise to create opportunities and to grow there brand. 

Owning your own franchise opens a whole new world. Franchising is one of the most exciting and could in the long run prove to be more affordable than going at it alone. 

The word “franchise” in French means “privilege” or “freedom” – in essence giving an individual the “right” to something – in this case the right to operate a business or licence under specific conditions.  
Franchising is, without doubt, the most “public” of business formats.  You recognise a franchise because it carries a strong brand, has a distribution mechanism that reaches far and wide and provides a uniform product, service and image to the public. The word franchising, however, can apply to many “rights” – from the franchising rights of cartoon characters like Mickey Mouse or movies like the Matrix to the franchise “rights” of soccer clubs like  “Ajax”.  
Business Format Franchising is defined as a distribution network operating under the shared trademark or trade name with franchisees paying the franchisor for the right to do business under that name for specified period of time.  In exchange, the franchisee is able to use the franchisor’s business system or format, including the name, goodwill, product and services, operating manuals and standards, marketing procedures, systems and support facilities. The franchisor, in turn, is obliged to give initial and ongoing services and support.

Product & Trade Name Franchising is characterized as a sales relationship between a supplier and a dealer, product and trade name franchises can be found most commonly in car dealerships, petrol service stations and cold drink bottlers. The dealer is granted the right to sell its products in exchange for fees and royalties and has an obligation to sell only the franchisor’s products.

Get the Facts on Franchising
On a more basic level; franchising is really just an extremely good distribution method.  The “franchisor” or person, who starts a company or develops a concept, uses others (franchisees) to duplicate his concept and distribute it on a large scale.  This inter-dependency forms the basis to the business format and its success lies in the effective implementation of certain basic but clearly defined business principles.  The juxtaposed relationship between franchisor and franchisee needs to be fully understood and accepted for the overall business to succeed. 

The responsibilities of each side include:

The word “franchise” in French means “privilege” or “freedom” – in essence giving an individual the “right” to something – in this case the right to operate a business or licence under specific conditions.  
Franchising is, without doubt, the most “public” of business formats.  You recognise a franchise because it carries a strong brand, has a distribution mechanism that reaches far and wide and provides a uniform product, service and image to the public. The word franchising, however, can apply to many “rights” – from the franchising rights of cartoon characters like Mickey Mouse or movies like the Matrix to the franchise “rights” of soccer clubs like  “Ajax”.  
Business Format Franchising is defined as a distribution network operating under the shared trademark or trade name with franchisees paying the franchisor for the right to do business under that name for specified period of time.  In exchange, the franchisee is able to use the franchisor’s business system or format, including the name, goodwill, product and services, operating manuals and standards, marketing procedures, systems and support facilities. The franchisor, in turn, is obliged to give initial and ongoing services and support.

Product & Trade Name Franchising is characterized as a sales relationship between a supplier and a dealer, product and trade name franchises can be found most commonly in car dealerships, petrol service stations and cold drink bottlers. The dealer is granted the right to sell its products in exchange for fees and royalties and has an obligation to sell only the franchisor’s products.

Get the Facts on Franchising
On a more basic level; franchising is really just an extremely good distribution method.  The “franchisor” or person, who starts a company or develops a concept, uses others (franchisees) to duplicate his concept and distribute it on a large scale.  This inter-dependency forms the basis to the business format and its success lies in the effective implementation of certain basic but clearly defined business principles.  The juxtaposed relationship between franchisor and franchisee needs to be fully understood and accepted for the overall business to succeed. 







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