What Exactly is Franchising?

A person may either want to open a business on her own or she might opt for a franchise. What does franchising mean is what you will be made to learn here.

Definition: Franchising is the strategic alliance between a franchisor and a franchisee.

There are two parties or entities involved in a franchise agreement – franchisor and franchisee.

Franchisor is the party or entity that owns and has the right to control the use of the trademark, also known as the trade name, products etc. Franchisee, in contrast, is an individual or entity that is allowed by the franchisor to use its trademark, products etc for an agreed amount of fee. The goal of both that is franchisor and franchisee is to dominate the target market.

For example, Kidzee, which is one of the popular preschool chains in Asia is the franchisor that grants individuals the right to operate its preschools for a certain amount of money and assets. In simple words, a franchisee invests his assets such as land, building etc money, and other resources for acquiring and operating a Kidzee franchise.

A franchise is nothing but a privilege officially granted to do business under explicit guidelines at a particular location for a declared time period.

A franchise agreement that we mention above a while ago is the legally approved document that governs the relationship between a franchisor and franchisee for a specified period of time. Hence, in conclusion, what you need to note is that a franchise gets the licensed privilege to do business by the franchisor or franchise provider.

Rais Dar

About Author:

Rais Dar is the founder and CEO of Startup Daily Tips Magazine. He spends most of his time collecting tips, insights and advice while meeting entrepreneurs throughout the world.