A Franchise is a form of business that agrees to the rights to sell the product or services of an established business and use their name in a given territory. A franchisee is a person who buys a franchise and signs a franchise agreement. A franchise can be a sole proprietorship, a partnership or a corporation. Franchising works best for businesses with a good track record of profitability and are easily duplicated. A franchise is good for someone who wants to start a business but is apprehensive of starting one from scratch. [1,2]
The advantages of a franchise are: [1]
- Management and marking assistance
- Personal ownership
- Nationally recognized name
- Financial advice and assistance
- Lower failure rate
The disadvantage of a franchise are: [1]
- Large startup cost
- Shared profits
- Management regulations
- Coattail effects
- Restrictions on selling
- Fraudulent franchisors
A few of the companies that franchise:
- Subway
- McDonalds
- 7-11
- Dunkin Donuts
- Quiznos
- Flame Broiler
- Etc…
AcqLinks and References:
- [1] Nickels and McHugh, “Understanding Business” McGraw-Hill Irwin 2010
- [2] Website: Wikipedia – Franchising