2. How Does Franchising Work?
A franchise may be easy to recognize--everyone knows McDonald’s
restaurants are franchises--but it can be harder to define franchising
than to recognize it. Franchising is not a buyer-seller business
transaction; it is a relationship between two parties, each of which
brings something of value to the other. The franchisor is the party
with a well-developed business of selling products and/or services,
and the franchisee is the party bringing capital for the growth and
further development of the business. In franchising, the way
business is conducted is part of the package, because the franchisor
and the franchisee will share a trade identity.
3. How Does Franchising Work?
Franchises vary in their size and nature. The simplest model is the
single-unit franchise in which the franchisee owns and operates one
or a few businesses. On a larger scale, an area franchise means that
the franchisee can develop an unlimited number of businesses within
a geographical area. Franchisors and franchisees have close
relationships based not only on shared products and/or services but
on shared confidential information, business format, trade dress, and
other trademarks.
4. How Does Franchising Work?
About the author: Don David Wilson is a founding partner of FranCap
Corporation, a company that specializes in managing and marketing
franchises as well as raising capital for the purchase of franchises.
