Nowadays, an almost unlimited number of trademarks have organized their networks on the regional, national or even international level according to what is called business franchising. Because it offers many advantages, the franchise business model has been adopted by many trademarks. The following are key points defining the business franchise, the general and essential terms of the franchise, and the advantages of this business model:
The case used to be that franchising meant significant initial investment outlays; this was at its most intense surge in popularity. High franchise fees, in addition to regular monthly costs and expenditures, drove up the initial cost of starting a franchise. Further investments were needed just to keep the franchise running until it could become profitable and sustainable. Franchising as a career move was reserved for those already wealthy enough to support it themselves or who had the good luck of securing a loan or investors willing to back the start-up business.
A franchise is a business model of marketing various kinds of products or services.A franchise is composed of two businesses: the franchisor and the franchisee. These two parties enjoy legal autonomy as well as separate capitals but collaborate closely according to a set of clauses they agree on.
The business franchise is structured around a collaboration between the franchisor and the franchisee, which terms and obligations are defined in a franchise contract.
The Franchise: the Obligations of the Parties.
Although franchise contracts vary largely, these are essentially the requirements that should always be met by the franchisee.
* The franchisor dictates a specific marketing strategy that he expects the franchisee to apply.
* To respect all sorts of norms established by the franchisor. (example: the procedure of using certain products and recipes.)
* To adapt to the evolution of the concept of the franchisor's know-how.
* To seek supplies from the providers indicated by the franchisor.
* To pay all the financial compensations owed to the franchisor, such as customs duty, license fees (related to the use of the brand for instance, or to certain services such as special training or publicity) and of a margin when the franchisee sells products provided and/or manufactured by the franchisor.
Since the business franchise is a collaboration, the franchisor must fulfill his part of the contract, which consists in assisting the franchisee throughout the business creation and development process. The franchisee expects from the franchisor that the brand be protected, as well as constant control and advice visits.
The Advantages of Business Franchising:
A business only starts to be lucrative or simply make any profit after a certain period of time and after developing a certain expertise. Business franchising precisely circumvents that as the franchisor puts his know-how at the disposal of the franchisee, shortening the period required to start making profit. The franchise is a solution that allows the new business to use the pioneer's competences and resources in order to start in an already structured activity. The franchisee's fresh interest in the business and his vested interest ensures his involvement and constitutes a major advantage for the franchisor. The capital invested in the franchise belongs to the franchisee who keeps his autonomy from the franchisor. Furthermore, the selection of the franchisee allows the franchisor to organize his network harmoniously.
It is important for the franchisee to collaborate with a well-developed and reliable trademark since he will be investing important capital.
The case used to be that franchising meant significant initial investment outlays; this was at its most intense surge in popularity. High franchise fees, in addition to regular monthly costs and expenditures, drove up the initial cost of starting a franchise. Further investments were needed just to keep the franchise running until it could become profitable and sustainable. Franchising as a career move was reserved for those already wealthy enough to support it themselves or who had the good luck of securing a loan or investors willing to back the start-up business.
A franchise is a business model of marketing various kinds of products or services.A franchise is composed of two businesses: the franchisor and the franchisee. These two parties enjoy legal autonomy as well as separate capitals but collaborate closely according to a set of clauses they agree on.
The business franchise is structured around a collaboration between the franchisor and the franchisee, which terms and obligations are defined in a franchise contract.
The Franchise: the Obligations of the Parties.
Although franchise contracts vary largely, these are essentially the requirements that should always be met by the franchisee.
* The franchisor dictates a specific marketing strategy that he expects the franchisee to apply.
* To respect all sorts of norms established by the franchisor. (example: the procedure of using certain products and recipes.)
* To adapt to the evolution of the concept of the franchisor's know-how.
* To seek supplies from the providers indicated by the franchisor.
* To pay all the financial compensations owed to the franchisor, such as customs duty, license fees (related to the use of the brand for instance, or to certain services such as special training or publicity) and of a margin when the franchisee sells products provided and/or manufactured by the franchisor.
Since the business franchise is a collaboration, the franchisor must fulfill his part of the contract, which consists in assisting the franchisee throughout the business creation and development process. The franchisee expects from the franchisor that the brand be protected, as well as constant control and advice visits.
The Advantages of Business Franchising:
A business only starts to be lucrative or simply make any profit after a certain period of time and after developing a certain expertise. Business franchising precisely circumvents that as the franchisor puts his know-how at the disposal of the franchisee, shortening the period required to start making profit. The franchise is a solution that allows the new business to use the pioneer's competences and resources in order to start in an already structured activity. The franchisee's fresh interest in the business and his vested interest ensures his involvement and constitutes a major advantage for the franchisor. The capital invested in the franchise belongs to the franchisee who keeps his autonomy from the franchisor. Furthermore, the selection of the franchisee allows the franchisor to organize his network harmoniously.
It is important for the franchisee to collaborate with a well-developed and reliable trademark since he will be investing important capital.
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