What is the concept of franchising?

What is the concept of franchising?

A franchise is a joint venture between a franchisor and a franchisee. The franchisor is the original business. It sells the right to use its name and idea. The franchisee buys this right to sell the franchisor's goods or services under an existing business model and trademark.

What is franchising and its example?

Franchising is a business relationship between two entities wherein one party allows another to sell its products and intellectual property. For example, several fast food chains like Dominos and McDonalds operate in India through franchising.

What are the steps in franchising?

The following are the steps to franchise your business:

1. Determine if Franchising is Right for Your Business. ...
2. Franchise Disclosure Document. ...
3. Operations Manual. ...
4. Register Your Trademarks. ...
5. Establish Your Franchise Company. ...
6. Register and File Your FDD. ...
7. Create Your Franchise Sales Strategy and Set a Budget.

What is meant by the term franchisor?

What Is Franchisor? A franchisor sells the right to open stores and sell products or services using its brand, expertise, and intellectual property. ... The small business owner who purchases these rights is called a franchisee and the branch business, itself, is called a franchise.

Why is franchising important in today's economy?

Franchising contributes to job growth, and small business owners are helping to boost the economy and drive economic growth—not the giant corporations. Franchising is vital in the growth of today's economy, contributing over $780 billion annually in total economic output.

What information is included in a franchise agreement?

Agreement, Territory Area, Area Licensee, Authorized deductions, Gross Receipts, License Network, The System Manual, Trademarks, Start Date, Trade name, Termination, Transfer of license.

What are the 3 steps of franchising?

In order to thrive as a franchisor, there are three main steps that have to be considered before jumping into the wilderness of franchising. The three main steps are concept size, feasibility and “know how”.

What are the 3 conditions of a franchise agreement?

According to Goldman, three elements must be included in a franchise agreement: A franchise fee. Some amount of money must be paid by the franchisee to the franchisor. A trademark or trade name.

What is the difference between franchisor and franchiser?

The “franchisor” is the person or corporation that owns the trade-marks and business model. The “franchisee” is the person or Corporation that owns and operates the business using the trade-mark and business model system licensed from the franchisor. ...

What are the two main types of franchising in the Philippines?

There are two main forms of franchising — product distribution franchising and business format franchising.

What are the pros and cons of franchising?

• Pros & Cons of Franchising. One of the most difficult decisions you have to make when starting your own business is whether to join a franchise or go it alone. At first glance, a franchise business might seem like an easy call. Franchise companies often promise entrepreneurs lower risk, an easier startup, less work, more support, better resources,...

What to consider before franchising?

• The most important thing you should do is research franchising. It involves a whole new set of laws, regulations, and other things you should consider before choosing to franchise your company. One other important factor to consider is whether or not your company is successful and presentable.

What are the main benefits of franchising?

• One of the most important benefits of franchising is that the business starts up costs and potential revenue will already be calculated and unexpected extra costs of trial and error are avoided. You will be able to benefit from franchising by determining the value and appeal of the business and the sustainability of the chosen type of franchise.

How do I start a franchise business?

• Contact your desired franchise business(es). Start your journey to franchise ownership by meeting with franchise businesses that interest you. Schedule appointments with representatives from your chosen franchises to learn the requirements to open your own franchise.