What Is Franchising?

7575 words 31 pages
1 Introduction

The purpose of this paper is to shed some light on the concept of franchising from the viewpoint of the franchisor, discuss its different uses taking into account the advantages and disadvantages attached to them, and link these considerations to a firm’s internationalization decision-making process.

1 What is franchising ?

Franchising as it is generally known today is a form of marketing or distribution in which a parent company customarily grants an individual or a relatively small company the right, or privilege, to do business in a described manner over a certain period of time in a specified place. The parent company is termed the franchisor; the receiver of the privilege is called the franchisee; and the
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6. There has always been people that want to start their own business instead of being an employee to somebody else. Additionally, in some countries it is highly respected to have a business of your own. Franchising has offered a possibility to get started with less financial resources.

7. In some countries it has become easier to obtain capital. Today franchising is highly respectable. Banks and other investors understand and appreciate the solidity of many franchising operations.

8. Franchising involves sharing responsibility and outcome. In most industrialized countries we have been trained and we are accustomed to work in disciplined forms - a precondition to franchise system’s functional viability.

9. Attitudes that have been an obstacle to the expansion of franchising in the past have developed in a more positive direction. People used to feel that it was degrading to join in a system that left them dependent on somebody else’s expertise and put them under supervision of a central unit. In recent times attitudes toward co-operation have changed, though.

10. Both in the United States and Europe authorities and the media have accepted franchising, since it contributes to economic development and is worth preserving. Undoubtedly, this has been a major factor in


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