Franchising . What is Franchising?
Franchising is a method of doing business. It is a method of marketing a product and/or service which has been adopted and used in a wide variety of industries and businesses. The word "franchise" literally means to be free. In this sense, franchising offers people the freedom to own, manage and direct their own business. However, as with any freedom, there are responsibilities. In franchising, these responsibilities have to do with the franchisee's commitments and obligations usually spelled out in a franchise agreement or contract to the franchiser. The franchiser is the one who owns the right to the name or trademark of the business. The franchisee is the one who purchases the right to use the trademark and system of business.
There are two different types of franchise arrangements:
- Product distribution arrangements in which the dealer is to some degree, but not entirely, identified with the manufacturer/supplier
- Business format franchises in which there is complete identification of the dealer with the buyer.
Business format franchises offer the franchis