franchising

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Franchising is a strategy adopted by business to expand in different territories away from its home town.

So what is in franchising, in this the franchisor gives lincense to the franchisee to use their business model, procedure, intellectual property, and right to sell its products and services.

And in return what franchisee does it has to pay a certain amount of fee to the franchisor and also there are certain agreement are made in the agreements.

It is not equal to the partnership, this is due to the legal advantages that franchisor has over franchisee, but it is seen that this type of model can be successful for both franchisor and franchisee.

The franchising model is used earlier by many successful business known know, from coca-cola to McDonald.

The singer company first implement the franchisee model back in 1850 to distribute its sewing machines.

After that many companies adopted this model General Motors, KFC etc.

Franchising began back in the 1850s when Issac Singer invented the sewing machine. In order to distribute his machine outside of his geographical area, and also to provide training to his employees, Singer began selling licensed to entrepreneurs in different parts of the country.

Another example is that of Ray Kroc in 1955, who took over a small chain of food franchises and built it into today's most successful fast food franchise in the world which is popularly known as McDonald's which has now the most franchise units worldwide.

Today, franchising is helping thousands of aspiring entrepreneurs to be their own boss and operate their own business. It allows entrepreneurs to be in business for themselves, and fortunately there is a much higher chances of success since the business products, services and operations have already been established.

Day by day the franchising opportunities have been changing its dynamics to keep up with the environment as well as important social trends.

So, Franchising is defined as an agreement where the manufacturer or the owner of an established enterprise gives exclusive rights of business and local distribution to small scale business owners in return for their payment of a percentage of the profits. The person offering the franchise is known as the Franchisor. The Franchisee is that small entrepreneur or retailer who gets the opportunity to enter the new business with better chances if success.

A Franchise Agreement is tbe legal document that binds the franchisor and franchisee together. This document explains... (More)

the term franchising means an agreement between franchisor and franchisee where franchisor grants legally the use of his expertise , trademark,  selling goods and services , ideas etc. and in return franchisor asks commission and some percentage share of franchisee 's revenue or profits . it is contractual entry mode used by the firms or companies to enter into new markets in other countries. 

following are the advantages : 

1. association with a well established brand or product 
2. assistance in getting required finance for establishing the business. 
3.  it helps in expanding into different regions of the world .
4. assistance is given in terms of Site location and selection .
5. operating according to laid down standard procedures and policies 
6. get access to market research along with advertising assistance . 
7. involves low political risk

 the disadvantages of franching are as follows :

1. franchises may turn into  competitors in future. 
2. if franchise is given to wrong person it can harm the reputation and goodwill of the company in the market .
3. quality of the product can be inconsistent which can have  negative impact on products image.