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Company_Structures

Franchising

Franchising is s business system in which a company (franchisor) sells an individual (franchisee) the right to operate a business using the franchisor’s established system or format.

As part of the franchise agreement the franchisee pays an initial sum of money, a franchise fee or front end fee, to the franchisor and agrees to pay a royalty or management services fee for continuing advice and assistance, which is usually calculated as a percentage of annual turnover

Businesses for which franchising work best have one or several of the following characteristics[

As practiced in retailing, franchising offers franchisees the advantage of starting up business quickly based on a proven trademark, and immediate access to the tooling and infrastructure, as opposed to having to develop them.