A Formal Definition Of Franchising - 1734 Words

Introduction and Overview In the business world there are many routes businesses can take to try to ensure a successful venture. There are sole proprietorships, partnerships, limited liability partnerships, corporations, limited liability corporations, S corporations, and then there is franchising. A formal definition of franchising is â€Å"a continuing relationship in which a franchisor provides a licensed privilege to the franchisee to do business and offers assistance in organizing, training, merchandising, marketing and managing in return for a monetary consideration† (Franchising, n.d.). In simpler terms, franchising is paying someone for their business, marketing, and operations strategy, as well as the use of their name (Obringer, n.d.). Discussed next are the important roles in franchising. Two Roles of Franchising There are two important roles in franchising are the franchisor and the franchisee. The franchisor is the owner of the brand, product, or service, while the franchisee is the party that pays for the right to use the brand, product, or service. Usually the franchisee â€Å"pays a one-time franchisee fee plus a percentage of sales revenue as royalty† (What is†¦, n.d.). Unfortunately the franchisee fee does not include all of the necessary start up costs. There are many other fees and costs to be expected in order to successfully start up a franchise. These costs are worth it to franchisees though, because once the fees are paid they â€Å"gain immediate name recognition,Show MoreRelatedThe Methods Of Strategy Development Essay947 Words   |  4 Pagesmix of them. Competing successfully in the market place would require combining with other methods. Joint Development Joint development is choice in situations of entry into foreign markets. Joint development types acceptable for company are franchising, licensing, and export agents. 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