In its simplest terms, a franchise is a license from the owner of a trademark or trade name permitting.
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What does the term franchising mean in business?
In other words, franchising means the rights granted to a person or a group of people by a certain company to use its name or trademark in marketing and distributing its goods and services. In the today’s corporate world, there are popular franchises.
Is it a good idea to franchise your business?
Conclusion. In conclusion, therefore, though demerits of franchising are there, it remains to be an effective way of getting into business. The various merits make this form of starting business be popular, unlike other forms like start up. It therefore turns out that franchising is a major growth area for business.
What are the legal requirements for franchising a business?
There are agreements that have to be prepared such as the Uniform Franchise Offering Circulars (UFOCs). The documents may have to be filed in several states. However the yearly expenses are less than the initial costs of setting up the business and the required documentation. The laws of franchising are very technical.
What are the challenges of franchising a business?
Franchisors have been known to use psychological testing, training processes and detailed interviews in choosing the right candidates. There is also the issue of rapid growth of the franchise that needs to be managed. With the success of the franchise the franchisor may face coordination and control challenges if the growth is not managed well.
Last Update: Oct 2021
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