Franchise

A franchise is a busine1ss in which an established

business owner – known as the ‘franchisor’ – sells the
rights to use their company name, trademarks and
business model to independent operators, called
‘franchisees’.
Why run a franchise business?
There are lots of advantages in starting a franchise but
the prime one is that the risk of your business failing is
much lower than if you started a company from scratch.
With a franchise, you can enjoy the independence of
small business ownership while working with a tried and
proven business idea.
You’ll have the backing and support of a parent company
with an established reputation, proven management and
work practices, and you’ll benefit from any advertising
or marketing it carries out.
You don’t always need related business experience to run
a franchise – training is often provided by franchisors.
And finally it is often easier than starting your own
business.
2

Characteristics

1. License: The franchisee gets the right to use,

franchiser’s trademark under a license.
2. Policies: The franchisee must follow the policies
concerning the mode of conducting business, as
stated in the agreement.
3. Marketing support and technology: Franchisee is
supplied with continuous market support and
1

2
 technology, by the franchiser, to undertake
business, in the manner stated in the franchising
agreement.
4. Training: Complete training and assistance are
provided to the personnel working in the
franchisee’s enterprise.
5. Royalty: For making use of a well-known business
model, the franchisee pays the royalty to the
franchiser.
6. Limited period: Franchisee is allowed to use the
business know-how and brand name for a specified
period, as mentioned in the franchise agreement.
Although, the agreement can be renewed further.