A franchise is an arrangement where an established business sells its name and operating model to individuals or companies. There are two parties in a franchise: the franchisor, who sells the rights, and the franchisee, who buys them. The franchise agreement is the legal document that outlines the obligations and responsibilities of both parties, including training, fees, trademarks, and termination policies. While franchising allows for rapid expansion, there are also risks like loss of control, failure, and conflicts between franchisor and franchisee.

1. FRANCHISIN
G
Sumera Asgher Butt

2. Franchise
A franchise is an arrangement in which an established
business name is sold to an individual or company, who can
then start trading under that name. Many fast food
restaurants such as KFC and Pizza Hut operate franchises.
There are two parties involved in a franchise:
The franchisor: the
business selling the right to
trade its product or service;
The franchisee: the
company or person
buying the franchise.

3. Franchising Agreement
 Franchising
 The franchise agreement is the cornerstone document
of the franchisee--franchiser relationship. It is this
document that is legally binding on both parties, laying
out the rights and obligations of each

4. Franchising Agreement
 It Includes
 the obligations of the franchiser and franchisee
regarding operating the business.
 the training and operational support the franchiser will
provide (and at what cost);
 territory and any exclusivity
 how much Franchisee must invest; what royalties and service
fees will pay;

5. It Includes
 how must deal with things such as trademarks, patents
and signs
 advertising policies;
 franchisee termination issues;
 settlement of disputes

6. Advantages and Disadvantages of Franchising As a
Method of Business Expansion
Advantages Disadvantages
• Rapid, low-cost market
expansion.
( Local and overseas)
• Income from franchise fees
and
royalties.
• Franchisee motivation.
( Business Owner)
• Access to ideas and
suggestions.
• Franchisee better understand
the local people taste
• Profit sharing.
• Risk of Loss of control
• Risk of Failure
• Friction with franchisees.
• Managing growth.
• Differences in required business
skills.
• Disclose confidential information.

7. Advantages and Disadvantages of Buying a
Franchise
Advantages Disadvantages
•Quick way of becoming owner
•A proven product or service
within
an established market.
• An established trademark or
business system.
• Franchisor’s training, technical
support, and managerial
expertise.
• An established marketing
network.
• Availability of financing (varies).
• Cost of the franchise.
• Restrictions on creativity.
•Strict adherence to standardized
operations
• Duration and nature of commitment.
• Risk of fraud, misunderstandings, or
lack of franchisor commitment.
• Poor performance on the part of
other
franchisees or by the franchisor.
• Potential for failure. (franchisor may
terminate the license if fails to follow

8. Advantages and Disadvantages of Buying a
Franchise
Advantages Disadvantages
• site selection and territorial
protection
( extensive location analysis), traffic
pattern, accessibility of customer
and suppliers)
•Market saturation
(Aggressive growth strategy by
franchisor)

9. Types of Franchising
 Trade name & Product
distribution
 Business format

10. 15-
10
Individual Franchise Agreement
Types of Franchise Agreements Agreeme

11. 15-
11
Area Franchise Agreement
Types of Franchise Agreements Agreeme

12. 15-
12
Master Franchise Agreement
Types of Franchise Agreements Agreeme