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In Business Format Franchising, a company licenses its trademarks and proven business methods to others in exchange for a recurring payment, a percentage of gross sales or a fixed fee. A company that licenses its trademarks and methods is called a franchisor. An individual who pays to use a franchisor’s trademarks and methods is called a franchisee (or franchise owner).
Franchisor has to approve the franchisee location site preparation and sign the confidentiality agreement before providing the specific manual, procedures, recipes and work instruction to start the new business.
FRANCISORS MARKET ANY COMPANY PRODUCTS WITH THEIR SPECIFIC ALLOWED AREA, CONTROL ITS SALES, DISTRIBUTION, DISCOUNTS ETC BUT PRODUCT REMAIN THE PROPERTY OF THAT COMPANY,,, COMPANY CONTROLS THE MANUFACTURING.
all my friends are right
The franchisor allows franchisee to use its brand or names but it controls continuously on franchisees that they must follow the same standard of operation of the store.
It sends assistances to franchisees to help them accounting and purchasing system.
Franchisees need to pay a fixed periodable fee to franchisors for trade mark patent, promotional and advertising expenses and method pf operating of the business. The advantage of franchise is that franchisor can expand its shops in a relatively short period of time. Franchisees can learn the way they operate from franchisors and make cost-effective operation by bulk purchasing, effective advertising and promotion of stores.
Agree with Mr: mohammed sai
I am not an expert but I know that a franchise means that you operate you own business using somebody elses brand and be commited to his/her operations standard policies and procedures.
