|
|
||
|
Franchising |
|
|
|
Franchising (from the
French for honesty or
freedom) is a method of
doing business wherein a
franchisor licenses
trademarks and tried and proven
methods of doing business to a
franchisee in exchange
for a recurring payment, and
usually a percentage piece of
gross sales or gross profits as
well as the annual fees. Various
tangibles and intangibles such
as national or international
advertising, training, and other
support services are commonly
made available by the
franchisor, and may indeed be
required by the franchisor,
which generally requires audited
books, and may subject the
franchisee or the outlet to
periodic and surprise spot
checks. Failure of such tests
typically involve non-renewal or
cancellation of franchise
rights.
A business operated under a franchise arrangement is often called a chain store, franchise outlet, or simply franchise.
The term
"franchising" is
used to describe
business systems
which may or may
not fall into
the legal
definition
provided above.
For example, a
vending machine
operator may
receive a
franchise for a
particular kind
of vending
machine,
including a
trademark and a
royalty, but no
method of doing
business. This
is called
product
franchising
or trade name
franchising.
A franchise agreement will usually specify the given territory the franchisee retains exclusive control over (the area protection), as well as the extent to which the franchisee will be supported by the franchisor (e.g. training and marketing campaigns). |
||
This article is licensed under the GNU Free Documentation License.
