2. Franchising
Franchising is a system used by a company
(franchisor) that grants others (franchisees) the right
and license (franchise) to market a product or
service under the franchisor’s trade names,
trademarks, service marks, know-how and method
of doing business. It is a system for distributing
products or services through independent resellers.
It is a format of mutual dependence which allows
both the franchisor and the franchisee realize profits
and benefits.
3. Some Terms
Regarding Franchising
Franchisor: The licensing company in the franchise
agreement.
Franchisee: The independent owner of a franchise
outlet who enters into an agreement with a franchisor.
Franchise: The right to use a specific business name and sell
its goods or services in a specific city, region or country.
4. Franchise Agreement
Obligations of the Franchiser and the Franchisee:
Franchisor Guarantees:
Use of company name
Management training
Financial help
Continuing management help
Wholesale prices on purchases
Franchisee Obligations:
Paying franchise fees
Making minimum investment
Meeting quality standards
Following procedures
Maintaining business relationship
5. Joint Venture
A joint venture (JV) is a business arrangement in
which two or more parties agree to pool their
resources for the purpose of accomplishing a specific
task. This task can be a new project or any other
business activity. In a joint venture (JV), each of the
participants is responsible for profits, losses and costs
associated with it. However, the venture is its own
entity, separate from the participants' other business
interests.
6. JV Agreement
Regardless of the legal structure used
for the JV, the most important document
will be the JV agreement that sets out
all of the partners' rights and
obligations. The objectives of the JV,
the initial contributions of the partners,
the day-to-day operations, and the right
to the profits and/or the responsibility for
losses of the JV are all set out in this
document. It is important to draft it with
care, to avoid litigation down the road.
7. What a Joint Venture May
Look Like
The key elements to a joint venture may include (but are
not limited to):-
1. The number of parties involved
2. The scope in which the JV will operate (geography, product,
technology)
3. What and how much each party will contribute to the JV
4. The structure of the JV itself
5. Initial contributions and ownership split of each party
6. The kind of arrangements to be made once the deal is complete
7. How the JV is controlled and managed
8. How the JV will be staffed