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Ch 15 - CHAPTER 15 FRANCHISING FRANCHISING a form of...

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CHAPTER 15 FRANCHISING FRANCHISING - a form of business organization in which an existing firm that has a successful prod/serv (franchisor) licenses its trademark & business model to others (franchisee) in exchange for an initial franchise fee & ongoing royalties Types of franchise systems (2) 1. Product and trademark franchise - the franchisor grants to the franchisee the right to buy its products and use its trade name (ex’s: GM & BP) 2. Business format franchise – (more common) the franchisor provides a formula for doing business to the franchisee along w/training, advertising & other assistance (ex’s fast food restaurants & convenience stores) Types of franchise agreements (3) 1. Individual franchise agreement – (most common) involves the sale of a single franchise for a specific location 2. Area franchise agreement - allows a franchisee to own and operate a specific number of outlets in a particular geographic area 3. Master franchise agreement - in addition to having the right to open and operate a specific number of locations in a particular area, the franchisee also has the right to offer and sell the franchise to other people in the area multiple-unit franchisee - individual that owns and operates more than one outlet of the same franchise
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