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All about Franchise
by Keith George
Published on this site: November 18th, 2006 - See
more articles from this month
Franchise according to the dictionary means "Granting authorization
to someone to sell or distribute a company´s goods or services in
a certain area or certain places".
Franchise is a license granted by a company or firm on certain terms and
conditions to an individual or firm to operate a retail outlet in a specified
area or place. The company or firm which grants the license is called
as franchisor, where as, the individual who accepts the terms and conditions
to operate a retail outlet is called as franchisee. Here the franchisee
agrees to use the franchisors brand name, products, services, promotions,
selling methods, add display and distributions on certain terms and conditions.
The franchisee pays a fee to the franchisor for the license to sell its
products, services or goods.
This type agreement helps both parties, the franchisor gets new area to
establish business where as the franchisee will get already developed
brand products and having no guess work about what to do, because all
development and decisions are made by franchisor and everything is laid
out, step by step, with nothing missing or left to chance and it all works
with precision.
The Legal Aspects of Franchising
In legal terms franchise is a contract. The franchisee is usually granted
an exclusive territory in which he or she is the only distributor of the
particular products or services in a specified place. The franchisor is
obligated to assist the franchisee through advertising, promotion, research
and development, quantity purchasing, training and education etc.
In 1979 the United States legislature had enacted the laws to protect
prospective franchisees from being deceived by the falsehoods of franchisors.
The franchisor has to disclose all financial details such as profit, operating
cost, recurring expenses and five year actual sales statement and these
laws are known as financial discloser law.
A franchisor also has to disclose the background of the company including
the business experience of its high level executives and whether any of
its executives, within the last seven years, have been convicted of a
felony or involved in litigation franchise business fraud, or have been
involved in any proceedings for bankruptcy. In addition to this disclosure
factual description of the franchise and statement of the total funds
to be paid such as initial franchise fees, deposits, down payments, prepaid
rent, and inventory purchases is mandatory. Conditions must also be clear
on recurring costs such as royalties, rent, advertising fees etc.
Keith George - always writes about valuable news & reviews.
A related resource is http://our-franchise.info/
Further information can be found at: http://about-sports.info/
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