FRANCHISING

 Hi viewers today we are going to look on a new chapter which is FRANCHISE. This chapter defines franchise, gives examples and finally the advantages.

Definition of Franchise

According to Kuratko (147-148), a franchise could be defined as an arrangement in which the owner of trademark, trade name, or copyright has licensed others to use it in selling goods and services.

Franchise: It can be defined as ”a form of business operation in which a franchisee pays a franchisor to acquire rights to utilize their expertise, knowledge, trade name, and logo as part of a business enterprise” (Graham Harper, 2011).

Who are franchisees and franchisors?

A franchisee is a person or company who purchases a franchise from the franchisor while a franchisor is a person or a company who sells a franchise to a franchisee.

Advantages of franchising

The following are the advantages of franchising:

Training and guidance: A franchisee is not just left by a franchisor to be on his own. A franchisor guides and trains a franchisee on how to manage the purchased franchise. Guide lines and ideas are given to the franchisee by the franchisor which can help the franchisee to build a successful business.

Brand-name appeal:  A franchisee who buys a well-known franchise has a big chance of succeeding. Customers happen to be more interested in products and services from a well-known and popular franchise than a franchise they don’t know of. Therefore, the name and brand of a franchise matters when owning a franchise.

A proven track record: A franchisee can easily determine the possibility of managing a successful business before buying a franchise. The franchisor has to present business records to the franchisee indicating success so that the franchisee can put into analysis before deciding to buy the franchise. A franchise with good record over some years of existence is likely to be more successful.

Financial assistance: Financial aid can be given to a franchisee by the franchisor in case there is limited capital to manage the business either as loan or even personally lending money to the franchisee.

Examples of franchises

As Kuratko indicated in his book, some examples include: RE/MAX, Domino’s Pizza LLC  Inter Continental Hotels, KFC Corp, Pizza Hut, Dunkin’s Donuts and subway.