Franchising : About

Many of us patronize franchises regularly, and its not just the ubiquitous fast food restaurants.  It's also franchises such as Kumon, LensCrafters, UPS, TwoMaids, Ace Hardware and even Dogtopia.  

Did you know that there are over 3000 unique franchises in the U.S, over 8.5 million people are employed by one, and their economic output is estimated to be roughly 860 billion U.S. dollars?

Franchising, or a business franchise model, is a contractual business model or relationship  whereby an established brand, known as the 'franchisor,' allows an independent business owner, or franchisee, to use its branding, business model, and other intellectual property.  In return, the franchisee agrees to pay an upfront franchise fee, plus ongoing royalties to the franchisor.

There are dozens of different types of franchise arrangements, but three of them are the most common.     

They include:          

•  Business format franchise: This is the most common type of franchise arrangement. In this model, the franchisor allows a third party to do business using their trademarks and business model in exchange for fees and a recurring percentage of sales revenue. Franchisees under this model are run according to the parent company's guidelines and rules.

• Product franchise: This is the oldest form of a franchise arrangement. Under this model, the franchisees exclusively distribute  or sell franchisor's products.

• Manufacturing franchise: Within this model, third-party manufacturers obtain exclusive rights to produce and distribute products using the franchisor's trade name and trademark.