A franchise is a legal and commercial relationship between the owner of a trademark, service mark, trade name or advertising symbol and an individual or group to use that identification in a business. The franchise leads the way to conduct business between two parties. Generally, a franchisee sells goods or services that are provided by the owner of the mark or meet their standards.
A franchise is based on mutual trust between the owner of the rattle and who acquired the franchise. The franchisor provides the business expertise (marketing plans, management, financial assistance, location, training, etc.). That would not otherwise be available to the franchisor, in turn, it brings entrepreneurship to make the franchise a success.
There are two types of franchise:
- Excess product or brand
- Business format franchise
In the simplest form, the franchisor owns the rights to a name or trademark and sells these rights to the franchisee. This is called ‘franchise product or brand. ” The most complex, “business format franchise” involves a broader relationship between the two parties. This model provides a wide range of services, including site selection, training, product supply, marketing plans and even assistance in obtaining financing.
When buying a franchise, the buyer often can sell goods and services that have instant brand recognition, image and name, and you can get support to help them succeed. But like any investment, purchasing a franchise is no guarantee of success.
A franchise allows the investor or franchisee operating a business. By paying a franchise fee, which can cost several thousand dollars, you get a format or system developed by the company that owns the brand, the right to use the franchisor’s name for a limited time and assistance.
For example, the franchisor can help you find a place for the business, provide initial training and operations manual, advising on matters of management, administration, marketing or personnel. Some franchisors offer ongoing support in the form of monthly newsletters, free telephone for technical assistance and periodic seminars or workshops.
While buying a franchise can reduce the investment risk associated with allowing an established company, this can be expensive. The Fund may also have to give up an important part of control over the business of contractual obligations to the owner.
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