Chapter 15 Notes

Chapter 15 Notes - Chapter 15 Franchising Highlighted Notes...

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Chapter 15 – Franchising Highlighted Notes are on Exam 3 Study Guide Franchising – is a form of business organization in which an existing firm that has a successful product/service (franchisor) licenses its trademark & business model to others (franchisee) in exchange for an initial franchise fee & ongoing royalties. Some franchises are established firms, while others are first-time enterprises being launched by entrepreneurs. It is a form of business growth that allows a business to get its products or services to market through the efforts of business partners or “franchisees.” I. Two Types of Franchise Systems: 1. Product and Trademark Franchise – is when the franchisor grants to the franchisee the right to 2. Business Format Franchise – (more common) is when the franchisor provides a formula for doing business to the franchisee along w/training, advertising & other assistance (ex., fast food II. Three Types of Franchise Agreements: 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 – is 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
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Chapter 15 Notes - Chapter 15 Franchising Highlighted Notes...

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