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Informanagement International / Informanagement system / What is franchising?
Feb 01

What is franchising?

  • 1 February 2017
  • Debbie Wanders
  • Informanagement system

A franchised business is one that is modelled;

  • As a structured, replicable commercial system by a founder/conceiver company, “the franchisor”.
  • Which will be contractually sold to independent entrepreneurs, “the franchisees”, with the purpose of them growing their business. They are legally, financially and fiscally independent of the franchisor.
  • The franchise network is made up of the franchisor and all of the franchisees.

A franchise company may operate several channels of distribution in parallel: franchising (in brick and mortar outlets or mobile vehicles), company-owned outlets, direct selling, etc. E-commerce is developing as a channel that cuts across the others. Its potential needs to be integrated to a company’s overall strategy.

To be recognised as a proper franchise, the system must be founded on the following essential and constitutive elements:

  • A brand name.
  • Knowhow developed by the franchisor and destined to be transferred to the franchisee as part of the transacted franchise package whose purpose it is to provide him with a business package with which he can start to operate more quickly and with facilities that a stand-alone start-up would not have. The franchisor must continue to develop the knowhow to maintain the brand & system’s competiveness on the market. The knowhow that the franchisor will develop is twofold: that what is needed for the internal business of the head company, and that what is designed to be transferred to the franchisees.
  • The initial and on-going assistance to the franchisees during the term of the contract.

Source: EFF European Franchise report 2012. 

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