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WHAT IS FRANCHISING? |
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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; and
- Business format franchises in which there is complete identification of the dealer with the buyer.
Business format franchises offer the franchisee not only a trademark and logo
but a complete system of doing business. Indeed, the word "system" is the key
concept to franchising. A franchisee receives assistance with the selection of
the business, personnel training, business set-up, advertising, and product supply.
For these services the franchisee pays an up-front franchise fee and on-going
royalty which enables the franchiser to provide training, research and development
and support for the entire business. |
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Contact Us | FED USA Franchising Group Homepage
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