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Chapter 4

CHAPTER 4.docx

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York University
Administrative Studies
ADMS 3920

15September2012CHAPTER 4 FRANCHISING AND BUYOUTSFranchisinga marketing system revolving around a twoparty legal agreement whereby the franchisee conducts business according to terms specified by the franchisor Franchisee is an entrepreneur whose power is limited by a contractual relationship with a franchising organizationFranchisor is the party in a franchise contract who specifies the methods to be followed and the terms to be met by the other partyFranchise Contractthe legal agreement between franchisor and franchisee Franchisethe privileges in a franchise contract Product and trade name franchisinga franchise relationship granting the right to use a widely recognized product or name Eg gasoline service stations automobile dealerships and softdrink bottlersBusinessformat franchisingan agreement whereby the franchisee obtains an entire marketing system and ongoing guidance from the franchisor Eg Fast food restaurants hotels and motels and business services A master franchisor is a firm or individual that purchases the rights to a franchise brand and develops it within a specific geographic region Master franchisors are responsible for finding new franchisees within a specified territory Multiple Usage Ownershipa situation in which a franchisee owns more than one franchise from the same company Some of these franchisees are area developersindividuals or firms that agree to develop a specific number of locations within a specific geographic area and time period Master Franchisea firm or individual that purchases the rights to a franchise brand and then acts as a sales agent with the responsibility for finding new franchisees within that specified territory Piggyback Franchisingthe operation of a retail franchise within the physical facilities of a host store Eg McDonalds Restaurant inside WalMartPROS AND CONS OF A FRANCHISE
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