Franchising

By: Espresso Vend Australia Franchise  11-Oct-2011
Keywords: Franchise Business, Franchise for Sale, Coffee Vending Machines

Franchising Franchising is the practice of using another firm’s successful business model. The word ‘franchise’ is of anglo-french derivation – from franc- meaning free, and used both as a noun and as a (transitive) verb. For the franchisor, the franchise is an alternative to building ‘chain stores’ to distribute goods and avoid investment and liability over a chain. The franchisor’s success is the success of the franchisees. The franchisee is said to have greater incentive than direct employee because he or she has a direct stake in the business. Except in the USA, and now in China (2007) where there are explicit Fedral (and in USA State) laws covering franchise, most of the world recognises ‘franchise’ but rarely makes legal provisions for it. Only Australia, various provinces in Canada, France and Brazil have significant Disclosure laws. Where there is no specific law, franchise is considered a distribution system, whose laws apply, with the trademark (of the franchise system) covered by specific covenants. Businesses for which franchising work best have one or several of the following characteristics: • A good track record of profitability. • Easily duplicated. • Detailed systems, processes and procedures. • Around a unique or unusual concept. • Broad geographic appeal. • Relatively easy to operate. • Relatively inexpensive to operate. As practiced in retailing, franchising offers franchisees the advantage of starting up quickly based on a proven trademark, and the tooling and infrastructure as opposed to developing them. Two important payments are made to a franchisor: (a) a royalty for the trade-mark and (b) reimbursement for the training and advisory services given to the franchisee. These two fees may be combined in a single 'management' fee. A fee for "Disclosure" is separate and is always a "front-end fee". A franchise usually lasts for a fixed time period (broken down into shorter periods, which each require renewal), and serves a specific "territory" or area surrounding its location. One franchisee may manage several such locations. Agreements typically last from five to thirty years, with premature cancellations or terminations of most contracts bearing serious consequences for franchisees. A franchise is merely a temporary business investment, involving renting or leasing an opportunity, not buying a business for the purpose of ownership. It is classified as a wasting asset due to the finite term of the license. A franchise can be exclusive, non-exclusive or 'sole and exclusive'.

Keywords: Coffee Franchise, Coffee Vending Franchise, Coffee Vending Franchise for Sale, Coffee Vending Machines, Franchise Business, Franchise for Sale, Vending Business Franchise, Vending Franchise,

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