Franchising

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31 May 2005

Franchising : A Bird 's Eye View (The Case of the Red Ribbon Bakeshop , Inc

Franchising , as defined by any lexicon , would refer to that form of doing business wherein an individual grants another person the right to market and at the same time sell the goods and or services it offers under his identified business trademark , as well as employing his technological know-how and business system . The term franchising ' was actually derived from a French word , which means free p

The individual who legally grants the above-mentioned right to business is commonly referred to as the franchiser , while the person who was given the right to market and sell is known as the franchisee . On the other hand , the agreement that legally binds the type of business relationship between a franchiser and franchisee is called a franchise agreement

Thus for a better definition of the term franchising and taking into account its key players , it can be said that franchising is that method or form of doing business wherein the franchiser grants the franchisee through a franchise agreement , the right to market and at the same time sell the goods and or services the franchiser offers under his business trademark , using his technological know how and his business system in exchange for a recurring royalty fee (Omaga , 1999

For the purpose of this , the author aims to discuss the fundamentals of basic franchising . Likewise , it is also the objective of the author to present the various types of franchising , how the franchising system started and operates , provide an overview of the franchising industry , as well as present the advantages and disadvantages of engaging in the said type of industry . It is also the aim of the author to cite business firms who have ventured into offering franchise rights to other entities and how it contributed to increasing its competitiveness in their respective industry , whether it is a food or non-food , foreign or local business entity

According to various references , the system of franchising actually came about some time in the year 1850 . It was evident in partnerships among hotels and breweries , automobile manufacturers and operators of local dealership , and other business partnerships of even nature . It later on evolved to modern franchising which was brought about by the rise of franchise-based restaurants in the year 1930s . But the development in the franchising system did not end there it actually metamorphosed into the widely known franchising system today , wherein the development of fast food chains have become prevalent and have become one of the most popular form of franchise that many business players invest upon . An example of this would include the internationally known business entities to wit : McDonald 's , Wendy 's etc . which have actually expanded their market arm in various countries all over the world . Likewise , for the case of those business entities that are engaged in the manufacture , advertisement , and selling of non-food products , on the other hand...