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Shahzad Arain
• Franchising Terms
• Types Of Franchises
• The Advantages Of
• The Limitations Of
Franchising Terms

A marketing system revolving around a two-party legal
agreement, whereby the
franchisee conducts business according to the terms
specified by the franchisor
• Franchise Contract
The legal agreement between franchisor and franchisee

• Franchise
The privileges conveyed in the franchise contract
Franchising Terms

An entrepreneur whose power is limited by a contractual
agreement with a franchisor

The party in the franchise contract that specifies the methods
to be followed and the terms to be met by the other party
Types of Franchises
•Product and Trade Name Franchise
Grants the right to use a widely recognized product or name

•Business Format Franchise

Provides an entire marketing system and ongoing guidance
from the franchisor

•Piggyback Franchising
The operation of a retail franchise within the physical
facilities of a host store
Types of Franchises
•Master Licensee
An independent firm or individual acting as a sales agent
with the responsibility for finding new franchises within a
specified territory

•Multiple-Unit Ownership
Holding by a single franchisee of more than one franchise
from the same company

•Area Developers
Individuals or firms that obtain the legal right to open
several franchised outlets in a given area
The Advantages & Disadvantages of
Pluses Minuses
Formalized training Franchise fees

Financial assistance Royalties

Proven marketing Restrictions on growth

Less independence in
Managerial assistance operations
Franchisor may be sole
Quicker startup time supplier of some
Overall lower failure supplies
rates Termination/renewal
The Advantages of Franchising
•Proven marketing concept and customer base
•Financial assistance
•Operating assistance
Financial Assistance

•Start-up business costs are normally high and thus

by teaming up with a franchise

organization, the individual can increase her/his
chance of receiving financial help.
•The franchisor might chose to use liberal payment
schemes to the franchisee in order to get over the
initial financial hurdle.
Operating Assistance

•The franchisor provides a range of operating services

including site selection, bulk purchasing of equipment,
and inventory.
•Other areas of assistance include the use of an
established, nation-wide brand
Limitations Of Franchising

• Franchise costs
-Initial franchise fee
-Royalty payments
-Advertising costs
• Loss of independence

• Restrictions on Business Operations