MGSB22H3 Lecture Notes - Lecture 11: Franchising, Trade Dress, W. M. Keck Observatory
Document Summary
The franchisor is the seller of the franchise and the franchisee is the buyer. Franchising is one of the fastest-growing forms of business. Franchising is a method of implementing the growth strategy of the franchisor"s venture. Franchising is a way of setting the boundaries of the organization through the franchising agreement that explains the organizational and financial constraints of the franchisor. The franchisor can, and often does, open company-owned units that allow him or her to conduct market experiments, gain knowledge of customer trends and changes, and maintain a solid understanding of procurement and operating costs. When ownership and control are separated and the agent (or manager) substitutes his or her own goals for those of the owner, an agency problem is said to exist. However, since the franchisee is the owner/manager of the unit, the agency problems are greatly diminished.
