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Franchising as an Option

So What Is Franchising

The legal definition of franchising as a business format is…

“ a relationship between two parties, - the franchisor and the franchisee, whereby the franchisor grants a ‘ license ' to the franchisee to trade / operate under their brand name for the duration of the franchise contract. ”

Just how exactly does this translate into a format for doing business?

Well, there are several key components. The first is that the franchisor owns the rights to the business: this means that they own the trademark, brand name and idea/concept - sometimes referred to as the intellectual property.

In order for a franchisee to trade under this brand name, they must pay a lump sum of money as well as on-going fees. This then entitles the franchisee to use the infrastructure and support provided by the franchisor to run their business. Underpinning this arrangement is the license, which includes regulations and controls that the franchisee must abide by.

In summary, there are essentially four key elements to franchising…

• Brand - The trading / company name that franchisees will operate under for the term of their contract
• System - The infrastructure created by the franchisor that brings all the operating and working procedures together for the franchisee.
• Support - The training and support strategies in place for each and every franchisee as implemented by the franchisor.
• Agreement - The franchise contract that binds the franchisee to the franchisor for a set period of time.