| What is a Franchise |
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What is a franchise?
The term 'franchising' has been used to describe many different forms
of business relationships, including licensing, distributor and agency
arrangements. The more popular use of the term has arisen from the
development of what is called 'business format franchising.'
In sport, a franchise is a club given permanent rights to play in a specific
league. The corporation which owns a major league sports team is often
called "the franchise" as a colloqiual term. This concept is standard in
the United States and Canada, but is foreign to sport structures in most
of the rest of the world.
A franchise is an authorization to sell a company's goods or services in
a particular place, a business established or operated under an
authorization to sell or distribute a company's goods or services in a
particular area, a business arrangement in which knowledge, expertise
and often a trade mark or trade name are licensed to an operator,
generally for an initial fee and a yearly payment.
The term 'franchising' has been used to describe many different forms
of business relationships, including licensing, distributor and agency
arrangements. The more popular use of the term has arisen from the
development of what is called 'business format franchising.'
In sport, a franchise is a club given permanent rights to play in a specific
league. The corporation which owns a major league sports team is often
called "the franchise" as a colloqiual term. This concept is standard in
the United States and Canada, but is foreign to sport structures in most
of the rest of the world.
A franchise is an authorization to sell a company's goods or services in
a particular place, a business established or operated under an
authorization to sell or distribute a company's goods or services in a
particular area, a business arrangement in which knowledge, expertise
and often a trade mark or trade name are licensed to an operator,
generally for an initial fee and a yearly payment.
The principle is simple - some companies choose to grow, not by developing in the conventional way, but by granting a license
to others to sell their product or service. There are clear advantages to this:
According to industry statistics, a new franchise opens somewhere in the US every 17 minutes. Some of the major advantages:
reduces risk of failure, turnkey operation, pretested a standardized product/service. Some of the major disadvantages: loss of
control, binding contract, and the franchises problems are your problems
The advantage that you have in franchising is that you are leveraging the brand of a bigger organisation and benefiting from
the input that they can give you – in the form of design, advertising, marketing, sales advice and training.
Franchising is not a short-cut to riches and fortune. It takes hard work, dedication and commitment to make a success of it – just
as it does with any business idea.
to others to sell their product or service. There are clear advantages to this:
- You don't have to come up with a new idea - someone else has had it and tested it, too!
- Larger, well-established franchise operations will often have national advertising campaigns and a solid trading name
- Good franchisors will offer comprehensive training programmes in sales and indeed all business skills.
- Good franchisors can also help secure funding for your investment as well as e.g. discounted bulk-buy supplies for
outlets when you are in operation - If aware that you are running a franchise, customers will also understand that you will be offering the best possible value
for money and service - although you run your 'own show', you are part of a much larger organisation.
According to industry statistics, a new franchise opens somewhere in the US every 17 minutes. Some of the major advantages:
reduces risk of failure, turnkey operation, pretested a standardized product/service. Some of the major disadvantages: loss of
control, binding contract, and the franchises problems are your problems
The advantage that you have in franchising is that you are leveraging the brand of a bigger organisation and benefiting from
the input that they can give you – in the form of design, advertising, marketing, sales advice and training.
Franchising is not a short-cut to riches and fortune. It takes hard work, dedication and commitment to make a success of it – just
as it does with any business idea.
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