Franchising is a concept of business organization enabling thousands of ambitious individuals to enter fields of occupational and business interest with an ease of entry usually far beyond what is found in starting a business from scratch.
In essence, when a person acquires a franchise, they enter into a contractual arrangement with another individual, partnership, or corporation. The franchisee expects to receive the full benefit of the franchisers past experience, reputation, and public identification, as well as the franchiser's continuing expertise. In exchange, the franchiser receives certain agreed upon sums of money from the franchisee.
The franchisee retains their full independent status under the franchise arrangement, although he/she may agree to certain controls and restrictions (usually in the realm of quality control) in exercising the franchise agreement. While operating independently, the franchisee looks to the franchiser for continuing advice, judgment, consultation, market research, and other evidence of business leadership. Perhaps more than anything else, the franchisee looks to the franchiser to “put him in business” with the background knowledge, materials and general expertise to generate profit far earlier than he might expect if he entered the business without benefit of the franchise system.
Perhaps the key element to be stressed in a franchiser-franchisee arrangement is the fact that as one party to the agreement prospers, so should the other. Unless and until the franchiser and franchisee fully realize their independence, the full advantages of the franchise will not be realized. Hard work, inventive thinking, and sound business practice is required to make a franchise successful.
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