franchise
- noun fran·chise ˈfran-ˌchīz plural franchises 1 a(1) : the right or license granted to an individual or group to market a company's goods or services in a particular territory ...
- verb franchised; franchising transitive verb 1 : to grant a franchise to ...
- Podcast Theme music by Joshua Stamper ©2006 New Jerusalem Music/ASCAP Get Word of the Day delivered to your inbox! Dictionary Entries Near franchise franchisal ...
Full Answer
What is the difference between a franchise and a franchisor?
The franchisor is the business that grants licenses to franchisees. When a business wants to increase its market share or geographical reach at a low cost, it may franchise its product and brand name. A franchise is a joint venture between franchisor and franchisee. The franchisor is the original business.
Can You Learn to be a franchisee?
Any business or trade can be learned, but combining industry-specific knowledge with the strength of a good franchise system is a powerful formula for success. How hard/long are you willing to work? This question is supremely important. Most franchisees don't make money in their first year, at least not a lot of it.
How do franchisees protect the brand name of the franchisor?
As the manager of the franchise, the franchisee is expected to protect the brand name of the franchisor by offering only approved products and services that are linked to the brand name of the original company. A company that has a global presence because of its franchises is the fast-food behemoth, McDonald’s.
What is the Franchise Rule?
The Franchise Rule is a legal disclosure given to a prospective purchaser of a franchise from the franchisor that outlines all of the relevant information in order to fully inform the prospective purchaser of any risks, benefits, or limits of such an investment.
What is a franchise right?
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Which is correct franchise or franchisee?
The franchisor is the original or existing business that sells the right to use its name and idea. The franchisee is the individual who buys into the original company by purchasing the right to sell the franchisor's goods or services under the existing business model and trademark.
What is the plural of franchise?
franchise (countable and uncountable, plural franchises)
Is franchise singular or plural?
The noun franchise can be countable or uncountable. In more general, commonly used, contexts, the plural form will also be franchise. However, in more specific contexts, the plural form can also be franchises e.g. in reference to various types of franchises or a collection of franchises.
What is franchise and franchisee in business?
A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand's trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system.
How do you spell franchisee plural?
The plural form of franchisee is franchisees.
How do you use the word franchise in a sentence?
Noun She was granted an exclusive franchise in the city's west end. They just opened a new fast-food franchise down the street. The U.S. did not extend the franchise to women until the early 20th century. He's the best player in the history of the franchise.
Is McDonald's franchised?
McDonald's is an equal opportunity franchisor by choice. We seek individuals who are capable of operating multiple locations. Candidates who have successfully operated multiple businesses may be suited to operating several McDonald's franchises.
What is meant by franchise in business?
A franchise is a type of license that grants a franchisee access to a franchisor's proprietary business knowledge, processes, and trademarks, thus allowing the franchisee to sell a product or service under the franchisor's business name.
Is KFC a franchise?
KFC Franchise is owned by Yum! brands, global franchisor whose 3 restaurant brands, Pizza Hut, Taco Bell and KFC, are amongst the largest and most well-known franchises in the world. They are leaders in their respective industries - Pizza, Mexican and chicken. Yum!
Do franchisees own the business?
In franchising, a franchise owner partners with a corporate brand to open a business under the brand's umbrella. The franchisee owns and operates that location using the franchisor's brand name, logo, products, services and other assets.
Can a franchisee be a company?
A franchisee is a sole trader, partnership or company who enters into an agreement with a franchisor to sell their products or services for a specified period in return for payment to the franchisor.
How do you become a franchisee?
What are the Steps to Take to Franchise a Business?Determine if franchising is right for your business.Issue your franchise disclosure document.Prepare your operations manual.Register your trademarks.Establish your franchise company.Register and file your FDD.Create your franchise sales strategy and budget.
What are the 4 types of franchising?
The four types of franchise business you can invest inJob or operator franchise. These owner operator franchises are usually home based, which keeps overheads down to a minimum. ... Management franchise. ... Retail and fast food franchises. ... Investment franchise.
Is Franchisable a real word?
Adjective. (business) Suitable for being franchised.
Is McDonald's franchised?
McDonald's is an equal opportunity franchisor by choice. We seek individuals who are capable of operating multiple locations. Candidates who have successfully operated multiple businesses may be suited to operating several McDonald's franchises.
Is KFC a franchise?
KFC Franchise is owned by Yum! brands, global franchisor whose 3 restaurant brands, Pizza Hut, Taco Bell and KFC, are amongst the largest and most well-known franchises in the world. They are leaders in their respective industries - Pizza, Mexican and chicken. Yum!
What Is a Franchise, and How Does It Work? - Investopedia
Franchise: A franchise is a type of license that a party (franchisee) acquires to allow them to have access to a business's (the franchiser) proprietary knowledge, processes, and trademarks in ...
FRANCHISE | English meaning - Cambridge Dictionary
franchise definition: 1. a right to sell a company's products in a particular area using the company's name: 2. the…. Learn more.
Franchise - definition of franchise by The Free Dictionary
fran·chise (frăn′chīz′) n. 1. A privilege or right granted by law, especially the right to vote in the election of public officials. 2. A special privilege given by government to a corporation or an individual to engage in a particular activity using public facilities, especially to provide a public service such as transportation or ...
What is Franchising? Definition and Meaning | FranchiseDirect.com
Franchising is a major force in the business world. Consider this… • There are over 745,000 franchise locations in the United States. • There are approximately 3,800 franchise systems operating in the United States, as of the beginning of 2019. • Over the past few years, 250 to 300 businesses annually have developed their concept into a franchise.
What is a franchisee?
A franchisee is a small business owner who operates a franchise. The franchisee has purchased the right to use an existing business's trademarks, associated brands, and other proprietary knowledge to market and sell the same brand, and uphold the same standards as the first business.
What is the relationship between a franchisee and a franchisor?
The relationship between a franchisee and franchisor is inherently one of advisee and advisor. The franchisor provides continual guidance and support concerning general business strategies such as hiring and training staff, setting up shop, advertising its products or services, sourcing its supply, and so on.
Why do franchisors pay a startup fee?
To start, the franchisor assigns the franchisee an exclusive location where no other franchises within the same underlying business currently operate in order to prevent competition and help ensure success. In return for the franchisor's advisory role, use of intellectual property, and experience the franchisee generally pays a startup fee plus an ongoing percentage of gross revenues to the franchisor.
What are some examples of franchises?
Examples of well-known franchise business models include McDonald's (NYSE: MCD), Subway, United Parcel Service (NYSE: UPS), and H. & R. Block (NYSE: HRB).
How many McDonald's franchises are there in 2020?
At fiscal year-end 2020, there were 39,198 McDonald's restaurants in 119 countries around the world, 93.17% of which were franchised. So, the company has 36,521 franchisees. 2 The company’s long-term goal is for 95% of McDonald’s restaurants to be owned by franchisees.
Do franchisees get help?
Franchisees typically get a lot of help, as franchisors will tend to supervise their new franchisees closely.
Who owns the intellectual property of a franchise?
No, the franchisor is the entity that owns the intellectual property, patents, and trademarks of the brand or business being franchised. A franchisee buys the rights and licenses to operate a location of the franchisor.
What Is a Franchise?
A franchise is a type of license that grants a franchisee access to a franchisor's proprietary business knowledge, processes, and trademarks , thus allowing the franchisee to sell a product or service under the franchisor's business name . In exchange for acquiring a franchise, the franchisee usually pays the franchisor an initial start-up fee and annual licensing fees .
Why do people buy franchises?
People typically purchase a franchise because they see other franchisees' success stories. Franchises offer careful entrepreneurs a stable, tested model for running a successful business. On the other hand, for entrepreneurs with a big idea and a solid understanding of how to run a business, launching your own startup presents an opportunity for personal and financial freedom. Deciding which model is right for you is a choice only you can make.
What Are the Risks of Franchises?
Disadvantages include heavy start-up costs as well as ongoing royalty costs. By definition, franchises have ongoing fees that must be paid to the franchisor in the form of a percentage of sales or revenue. This percentage can range between 4.6% and 12.5%, depending on the industry.
How Does the Franchisor Make Money?
Typically, a franchise agreement includes three categories of payment to the franchisor. First, the franchisee must purchase the controlled rights , or trademark , from the franchisor in the form of an upfront fee. Second, the franchisor often receives payment for providing training, equipment, or business advisory services. Finally , the franchisor receives ongoing royalties or a percentage of the operation's sales.
What is franchise contract?
Franchise Basics and Regulations. Franchise contracts are complex and vary for each franchisor. Typically, a franchise agreement includes three categories of payment to the franchisor. First, the franchisee must purchase the controlled rights, or trademark, from the franchisor in the form of an upfront fee.
What does a franchisor receive?
Finally, the franchisor receives ongoing royalties or a percentage of the operation's sales. A franchise contract is temporary, akin to a lease or rental of a business.
How long does a franchise contract last?
It does not signify business ownership by the franchisee. Depending on the contract, franchise agreements typically last between five and 30 years, with serious penalties if a franchisee violates or prematurely terminates the contract.
What does a franchise agreement give a franchisor?
“Most franchise agreements give franchisors the power to change required procedures, radically alter the product line, or require franchisees to make unexpected expenditures.”.
What is franchising based on?
Franchising is based on conformity and uniformity, not freedom. As a franchisee, you do not really hold the reins. You may technically be the boss of your shop, but you must follow the orders of the home office. “Franchising is similar in a lot of ways to joining the military in that you’re going to agree to follow orders, you’re going to wear the same uniform and you’re going to march up the hill together and try and accomplish the same mission. Buying a franchise in order to control your own destiny is akin to joining the marines in order to ‘do your own thing.’”
What to know before signing a franchise contract?
Before signing a legally binding contract with a franchise organization, it may be a good idea to see what that company’s critics have to say. For that there are message boards and news/discussion sites where franchisees can air their grievances and give advice. Kelly, who runs such a site, also recommended BlueMauMau.org. “The complaints of franchisees past and present indicate which aspects of the franchise deserve careful scrutiny, and what prospective franchisees can expect.” Know of other places to get feedback from franchisees? Comment below.
How to make an organization your life?
If you want to make an organization your life – at least for a few years – consider spending time working for it before you buy in. Getting experience and knowledge is key in making your decision. Some franchises, like Dominos, required it, says Kelly. “Speak to as many franchisees of the chain you are considering as possible.”
What is the benefit of franchise?
What they should do is the exact opposite, says Kelly. “The benefit of a franchise is really to buy something that’s been proven over a period of time. Hopefully something that’s been proven over different economic climates. So it’s done well in good times and in bad.”
Is franchising a consumer?
Franchisees are not consumers and not protected as such, they are considered entrepreneurs and business investors. Despite what some would-be franchisees believe, the government oversight in the industry is paltry at best. “The (Federal Trade Commission) instructs franchisors to disclose certain types of information to franchise buyers, but doesn’t check to see if they do so,” says Kelly. “If your franchisor doesn’t perform as promised or if you later feel you were lied to or misled, it’s likely that your only recourse will be to hire an attorney and file an expensive lawsuit.”
Do franchisors hire consultants?
These consultants live on the web and are ultimately a lure for the franchises that hire them, says Kelly. Best to just steer clear. “They’re third-party commissioned salespeople and brokers and they have very little franchise experience except for delivering prospects to the franchisors that they have commission arrangements with.”
What is franchise employee?
Whether they’re part-time, full-time, or salaried, franchise employees are the people most familiar with your company’s products and services. They know all the nitty-gritty details of the business; that knowledge can be an immense advantage to your marketing efforts.
What is franchising marketing?
Introduction to Franchise Marketing. Franchising is all about consistency, but consistency is a two-way street. While franchisors must create a profitable brand and business model that can be easily replicated, franchisees must help maintain brand reputation in order for it to retain its value.
Why do franchisors use social media?
One reason franchisors keep all of their marketing budget at the corporate level is that they may not fully trust the franchisees to know how to market their location. It’s can be a fair point as not all franchise investors have a significant marketing background.
Why shouldn't franchisors use social media alone?
But the franchisors can’t and shouldn’t approach social alone for two main reasons: inbound message volume and outbound message relevance. 1. Inbound Message Volume. Due to the amount of inbound volume most brands see, it doesn’t make sense for the franchisor to handle all of the social media messages.
Why do franchises need email marketing?
For one thing, it means every franchisee’s contact info can live in a single system. Secondly, it allows you to set up sub-accounts—each with its own set of user permissions—and give users as much freedom as you would like, without ever losing your central authority. More control and more efficiency means better results across the board.
Can franchise marketing be painful?
Franchise marketing can be a beast. But it doesn’t have to be painful.
How to find a franchise brand that fits?
Finding a franchise brand that "fits" involves values, both yours and theirs. Companies, like people, have their own culture and values, and you have yours. With all the franchise opportunities available, franchisors should want to know why you came to them. Success, for both franchisor and franchisee, depends on a healthy relationship.
Why do franchisors ask about your net worth?
That's why franchisors ask about your net worth and liquidity: they want to know you have enough to get going and to keep going. If the franchisor seems more interested in getting hold of your franchise fee and not in the ongoing royalty stream your successful unit will generate , consider another brand.
What is the importance of having a spouse on a franchisor board?
Having the support of your family — most importantly your partner or spouse — is a powerful asset you bring to the table. Some franchisors will require the candidate's partner or spouse to be on board, attend certain meetings, and even accompany the candidate on Discovery Day.
What is franchising goals?
The franchisor's primary goals are a successful unit that generates an ongoing royalty stream, and a good long-term relationship with their franchisees. Your goals may be the same (ongoing profits and a good relationship), and they also are more complex.
Can a franchisor work against you?
A franchisor looking to expand into a new market or penetrate more deeply into an existing market may be in more of a hurry than you are, which can work against you. It also can work in your favor, as franchisors have been known to offer discounts on the franchise fee and/or royalties available in selected markets.
What is a franchise right?
1 a (1) : the right or license granted to an individual or group to market a company's goods or services in a particular territory also : a business granted such a right or license just opened a new fast-food franchise down the street. (2) : the territory involved in such a right.
How many questions are there in the vocabulary quiz?
Test your vocabulary with our 10-question quiz!
Did you know?
Franchise was voted into early 14th-century English as both a noun and verb. It is from the Anglo-French verb franchir , meaning "to free," itself from franc, "free." To be perfectly frank, the word franchise is most often encountered today with reference to restaurant chains or professional sports teams (e.g., "a franchise quarterback"), not to mention branded retail stores and sequel-driven movies and novels. These commercial meanings are far from the original meaning of the word in English: "freedom or immunity from some burden or restriction vested in a person or group." This meaning evolved into the "right to vote" sense of the word.
What Is Franchisee?
Understanding Franchises
Franchisee Benefits
Franchisee Responsibilities
Franchisee Example: McDonald's
Does a Franchisee Own a Business?
Is a Franchisee the Same as a Franchisor?
- No, the franchisor is the entity that owns the intellectual property, patents, and trademarks of the brand or business being franchised. A franchisee buys the rights and licenses to operate a location of the franchisor.
Can a Franchisee Be Fired or Removed?
What Is A Franchise?
Understanding Franchises
- When a business wants to increase its market share or geographical reach at a low cost, it may franchise its product and brand name. A franchise is a joint venture between a franchisor and a franchisee. The franchisor is the original business. It sells the right to use its name and idea. The franchisee buys this right to sell the franchisor's goods...
Franchise Basics and Regulations
Pros and Cons of Franchises
Franchise vs. Startup