Franchising
Franchising is a business arrangement wherein a firm (the franchisor) collects up-front and ongoing fees in exchange for allowing other firms (franchisees) to offer products and services under its brand name and using its processes .
It is a marketing method in which the owner of a product or service, known as the "franchisor," offers the right to operate and manage his product and service to others, the "franchisees," in return for a fee and ongoing royalty payments [Peter T.Paul College of Business and Economics].
Franchising is a form of marketing and distribution in which the owner of a business system (the franchisor) grants to an individual or group of individuals (the franchisee) the right to run a business selling a product or providing a service using the franchisor's business system.
Franchisees can also use the franchisor's branding, trademarks, and identifying marks under specified guidelines. It is important for anyone deciding to start a business by becoming a franchisee to remember that in franchising, the franchisee is bound to a partnership agreement with the franchisor for a defined period (some exceptions exist) [Franchise Direct].
When an individual has the desire and drive to
run their own business but lacks a strong idea for a
company, this person may look to franchising in orderto be their own boss and run a proven business.
Thefranchisor has the business model, training materials,and other materials for the business. The franchisee isthe entrepreneur who agrees to operate a branch of thebusiness in their location while paying the franchisorvarious fees and royalties for the use of the businessidea or model. Franchising allows a business to rapidly expandbeyond its original owners. The franchisee pursues a
new business, experiences the advantages of running
their own business and being their own boss, and can
gain wealth through a proven business idea. They providethe management skills to run the business, as wellas contribute the capital to fund the opening and ongoingoperations. The franchisor also benefits by thepartnership and gains economy of scope advantages asmore franchises are established. National or internationaladvertising is then possible and the franchisorcan more easily expand business locations with thehelp and capital from thefranchisee. The franchiseehelps to build brand awareness through market proliferation.The franchisee has a unique opportunity torun a business with a greater chance of success. Thereis experience from the franchisor for starting the businessand many of the initial mistakes have been madeand corrected .
⠀ Combs, J. G., Ketchen, D. J., Shook, C. L., Short, J. C. (2011). Antecedents and Consequences of Franchising: Past Accomplishments and Future Challenges. Journal of Management, 37,Рр. 99-126.DOI: 10.1177/0149206310386963(P. 100).
⠀ Helmes, M. M. (2006). Franchising. In M. M. Helmes (Ed.). Encyclopedia of management (5th ed., pp. 311-314). Farlington Hills : Thomson Gale(P. 311-312).
What is Franchising? Peter T.Paul College of Business and Economics. Retrieved from: https://paulcollege.unh.edu/rosenberg/what-franchising
What is franchising? Find all you need to know here. Franchise Direct. Retrieved from: https://www.franchisedirect.com/what-is-franchising-definition/