Chapter 15. Franchising
What is Franchising and How does it Work? Franchising is a form of business organization in which a firm that already has a successful product or service ( franchisor ) licenses its trademark and method of doing business to other businesses ( franchisees ) in exchange for a initial franchise fee and an ongoing royalty. A franchise is an agreement between a franchisor (the parent company) and a franchisee (an individual or firm that is willing to pay the franchisor a fee for the right to sell its product, service, and/or business method. There is nothing magical about franchising. It is a form of growth that allows a business to get its products or services to market through the efforts of business partners or "franchisees". There are two distinctly different types of frachise systems: A product and trademark franchise: An arrangement under which the franchisor grants to the franchisee the right to buy its products and use its trade name. The business format franchi
