Articles of Franchise

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Articles of Franchise

What Is Franchising

The term franchise covers a wide range of arrangements under which the

owner of a product, process, service or even just a name (e.g.

sportsman) will issue a license to make or use something in exchange

for some form of payment

Here are some various types of franchise businesses (which are common

to business format franchise):

Ø A license to a manufacture a certain product within a certain

territory and over a given period of time, have access to any secret

process this involves and the use of its brand name in exchange for

royalty on the sales.

Ø The use of a celebrity name to enhance the sales with the guarantee

of the product. The most common example is the endorsement, by a sport

personality, of equipment associated with his/her activity and bearing

his/her name, in return for a royalty payment by the manufacturer.

A business format franchise is a joint venture between an independent

third party (franchisee) and a business (franchisor) that wishes to

expand it's business in the least cost effective way. The franchisee

will have to pay an initial fee for an agreement (license) to allow

certain rights over the franchisor's organisation. Many aspects are

still strictly controlled by the franchisor including image, products

or service, system and administration.

In return the franchisee will have to pay the franchisor an ongoing

management service fee and for materials supplied by the franchisor

(the franchisee has to buy from the franchisor), exclusive territorial

rights, advertising, promotion, training etc. The franchisee may also

have to contribute towards the national advertising costs.

History Of Franchise

The word franchise came from old French meaning privilege. In those


local sovereign or lord would grant the right to hold markets or

fairs, to operate the local ferry or to hunt on his land.

In the 1840's in Germany certain major ale brewers grantedfranchisee's

to certain taverns the exclusive right to sell their ale. This was the
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