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“Find something you love to do and you will never have to work a day in your life” - a few words about franchising.
By J. Rymarowicz
Published: 24.01.2012

   Modern market economy is very challenging for an independent economic activity, mainly because of a large amount of competition and a high risk of being phased out from the market. It seems that cooperation and agreements between business partners are a perfect solution especially for small companies. Their success is possible only when they join their resources, work on distribution strategies and launch technological innovations with a bigger, more powerful company. Franchising is a special commerce bond which is used by small businesses in order to become more competitive on the market. In legal terms a franchise is a contract. The franchisees usually granted an exclusive territory in which he or she is the only distributor of a certain product or a provider of a certain services in a specific place. The franchisor is obliged to assist the franchisee through advertising, promotion, research and development, quantity purchasing, training and education etc.
   Franchising gives an opportunity for development and growth with an assistance of their franchisor. Franchising is also said to be one of the most effective forms of business cooperation. It creates a very strong bond between business partners. In other words, a franchise is a business that has been expanded beyond its original owners. A franchise can range anywhere from a small business opportunity (for instance, a vending machine can be franchised) to a very complex multi-unit franchise (several large companies, for instance, require franchisees to develop several shops or business locations in a specific market). Moreover, it guarantees an efficient organization and it focuses on reaching success on a given market.
Franchising is considered to be quite universal way for it business cooperation mainly can be implemented in almost every economic market.
   A franchise is a very attractive option for many entrepreneurs because it allows potential franchisees to purchase and operate their own business in a relatively fast manner. A franchising business provides their trademark and a proven business model that can be easily replicated by the franchisee. Building a business from scratch and creating a strong brand name can take decades, resulting in several false starts, a strong learning curve and very costly start-up and operational costs. A franchise can allow a potential franchisee to by-pass these issues. A good franchise attracts customers who enjoy the product, are strongly attracted to the brand name, and appreciate a consistent product and business environment.
   The specifics of selling or purchasing a franchise can vary widely, depending on the type of business. In general, franchisees are required to pay the initial franchise fees. The franchisee is responsible for providing the capital to start up the business, as well as the initial franchise fee. Also, the franchisee is responsible for putting in place good managerial skills, and ensuring the successful day-to-day operation of the business. Moreover, the franchisee is required to pay ongoing royalty fees in order to maintain access to the franchise format that he or she originally purchased from the franchisor. Part of the franchisee royalty fees are also paid for the ongoing developments and enhancements that the franchising business develops through the course of the business development. Both parties, franchisee and franchisor, must sign a contract called the franchise agreement. The franchise agreement should be drawn immediately after the initial franchise fee has been paid.
The franchise agreement is crucial because it basiclly governs the relationship between both parties.
Justyna Rymarowicz