Franchising

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In order to understand the concept of franchising, let us start by studying some definitions of the term franchising:

Webster’s dictionary defines “franchise” as – “1. A privilege or right granted to a person or a group
by a government, state, or sovereign. 2. Authorization granted by a manufacturer to a distributor or dealer to sell his products.”

According to the International Franchise Association, a franchise is a “continuing relationshi1 in which the franchisor provides a licensed privilege to do business, plus assistance in organizing training, merchandising, and management, in return for a consideration from the franchisee.’ The legal definition expands this meaning – a franchise may also extend the right to use a predetermined method for marketing products or services, through outlets that use a known name or trademark. Franchising is not a business or an industry, but it is a method used by business for the marketing and distribution of products or services
.
The two parties which emerge are:

a) The Franchisor and
b) The Franchisee

 

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