Scribd Logo
Upload

Welcome to Scribd!

  • 111 views

    Franchising Legalities

    Uploaded by

    Kim Ravanzo
    franchising lecture

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Franchising Legalities

    Uploaded by

    Kim Ravanzo
    111 views16 pages
    franchising lecture

    Original Title

    FRANCHISING LEGALITIES

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    franchising lecture

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    111 views16 pages

    Franchising Legalities

    Uploaded by

    Kim Ravanzo
    franchising lecture

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 16

    CATEGORIES OF

    FRANCHISING
    1. Product or Distribution Franchise
    • A product manufactured by the
    franchisor (or on his behalf by another) is
    sold to a franchisee who in turn sells it to
    the consumer under the trademark of
    the franchisor. Such a franchise is usually
    restricted to a particular geographical
    area and the franchisee pays fees
    referred to as royalties to the franchisor
    for the right to do business under his
    trademark
    2. Manufacturing, Production or
    Processing Franchise
    • The franchisor sells to the franchisee
    an essential ingredient or provides
    some specific know-how, which along
    with ongoing quality controls by the
    franchisor, enabling the franchisee to
    manufacture/product/ process the
    final product and sell to the consumer.
    Coca cola operates in many markets in
    this manner supplying franchisees
    with the essential ingredient of Coca
    cola protected by a trade secret
    enabling them to produce the final
    product.
    3. Business Format Franchising
    • The owner of a
    business(franchisor) licenses to
    another(franchisee) the right to
    use the particular business
    model including the intellectual
    property associated with it,
    particularly the trademark.
    Business format franchising is
    the most widely used form of
    franchising.
    FOUR ESSENTIAL ELEMENTS OF
    BUSINESS FORMAT FRANCHISING
    • The franchisor allows the franchisee to use under license its proprietary
    IP, principally its trademarks but also its designs, patents, copyright and its
    confidential business information. The most important is usually the
    trademark on which the brand has been built and it is that brand
    recognition that makes the franchised business attractive
    • The franchisor controls the way the business is run and managed by the
    franchisee
    • The franchisor provides training, mentoring and assistance to the
    franchisee.
    • The franchisee makes both initial and periodic payments to the franchisor.
    Types of Franchising Arrangements
    • (a) Direct Franchise
    Agreement – A
    franchisor may enter
    into individual franchise
    agreements with each
    territory or outlet. Here
    the franchisor has
    direct control of his
    franchisees and a
    revenue flow that does
    not need to be shared
    with others.
    • (b) Master Franchise Agreement - A franchisor may enter into a
    master franchise agreement whereby another entity is given the right
    to sub-franchise the franchisor's business concept within a given
    territory with a development timetable. These rights are usually
    secured by an initial development fee charged by the franchisor.
    • (c) Development Agreement - A development agreements obliges a
    developer to open multiple outlets in accordance with a development
    timetable. Vis-ā-vis the developer and the outlets; rather it involves
    franchising between the franchisor and the developer.
    LEARNING POINT 2: PREPARING TO
    FRANCHISE

    You might also like