Abstract or Introduction
FRANCHISING is a business system in which a company (or franchisor) sells an individual (or franchisee) the right to operate a business using the franchisor´s established system or format.
As part of the franchise agreement the franchisee pays an initial sum of money, a franchise fee or front end fee to the franchisor and agrees to pay a royalty or management service fee for continuing advice and assistance, which is usually calculated as a percentage of annual turnover. The franchisee may also pay an advertising fee to contribute to the franchisor´s annual advertising and marketing costs. The franchisee also has to find the capital to open the business. The franchisor provides an operations manual which contains all the information that the franchisee needs to run his or her business. Franchising exist across many different industries, but the most common are in the restaurant and food service industry.
- Quote paper
- Chris S. (Author), 2008, Market Entry Options, Munich, GRIN Verlag, https://www.grin.com/document/135083
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