FRANCHISING OWNERSHIP

Franchising ownership

Introduction

Franchising is the practice of using the business model of another person. Franchising is a word of Anglo-French derivation that is used both as a noun or a verb (transitive). The dictionary of the Royal Spanish Academy (twenty-second edition) defines it in its second meaning as concession rights to operate a product, activity or trade name, issued by a company to one or more persons in a given area.

Definition of Franchise

A franchise is an agreement between the franchise and franchisor and the recipient or franchised by virtue of which the first gives the second operation of a franchise. There are several important elements that make up the franchise.  In exchange for the work, the franchisor receives a royalty or fee which may compensate the transfer of the trademark, know-how of the field of work transferred and the rate of training and advice cohered.

The exemption is granted, usually for a specified period and for a given territory. It can be an exclusive or nonexclusive franchise. Various tangible and intangible, such as support services, national or international advertising, training, and others commonly available are made by the franchisor. The agreements typically last between five and thirty years with the possibility of cancellation or early termination by notice. In case of breach of contractual terms there can be serious consequences for franchisees (Judd & Justis, 2007).

Kinds of Franchise

Industrial franchise

This is a form of entrepreneurial collaboration between manufacturers. The franchisor owns a manufacturing system and / or exclusive patents, which he sells to another manufacturer who replaces a particular area. Given the ease with which the franchisee may supplant the franchisor, copying formulas and methodologies received, generally does not give the franchisor to the franchisee, the entire process of production but only a part. 

Franchise Business

In turn, it can be divided into: - A franchise or distribution of product: This is a franchise whose goal is to commercialize one or more products, usually manufactured, distributed or selected by the franchisor on an exclusive basis or not. (Example: clothing) - A Franchise of Service: The purpose of the company consists of a service or set of services that the franchisee sells, according to a methodology he has received from the franchisor. This type of franchise requires greater control by the franchisor to ensure adequate quality of service provided. (Example: Hotels) - A Joint Franchise: These franchises including the subject of trade incorporate both product and service. (Example: some restaurants)

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Benefits of a Franchise

Benefits for the franchisor

Developing a franchise has many advantages for the franchisor. This includes things like getting to organize a nationwide network in exchange for a quick limited investment. One has full control over the development of the concept by the network control that has been given into access. Also, it creates a powerful economic force that will enable greater competitiveness (purchasing conditions, logistical important to the achievement of economies of scale). Furthermore, it helps in Organizing campaigns, and more generally, promoting the brand and the brand nationally.

Benefits to the franchisee

For the franchisee, the formula also includes a number of advantages which could be availed through the franchise considered to ...