Franchising is not a new concept. North America was among the first countries to successfully develop franchises in 1886 through the famous example of the Coca-Cola company. Franchises grew slowly during the 1950's but helped many firms expand their operations across borders, like Mc Donald's that established 6200 stores within 25 years owing to this strategy. We will first define is franchising is. It can be classified as a business strategy that can be used by companies to capture market share. It is a continuing legal and commercial relationship in which the franchisor provides a licensed privilege to the franchisee to do business by using its business experience, while offering support (in management, marketing, finance etc.) in return of a fee based on the franchisor's sales. The aim of this document is to get a general insight into franchising, particularly in English-speaking markets. In order to achieve this goal, we will follow the following structure: In the first part, the different types of franchises will be presented in general. To make a concrete application of our research, the second part will focus on franchising in the English-speaking markets. Franchising is first and foremost, a contract, and the last part will thus be dedicated to its legal aspects.
[...] Even for those U.S. States which do not have specific legislation regulating franchising, there is a mandatory federal disclosure obligation (the “FTC Rule”), which obliges franchisors to disclose certain material facts related to the franchise being sold. Audited financial statements are usually required, as are copies of all agreements to be signed by the franchisee. Failing to file a prospectus and register as a franchisor pursuant to state law, or failing to make disclosure under the FTC rule, or making a misrepresentation of facts in the franchisor's “disclosure package”, has serious legal consequences in the United States, which can lead to criminal convictions, cease trading orders, high damage awards by American juries, and in some cases, triple damages. [...]
[...] In addition, it lowers much of the political risk surrounding foreign investment. The franchisor has the opportunity to acquire a broad base of knowledge concerning local customs and market conditions, economic networks, political affiliations, and industry experience of the franchise partner, which can greatly enhance the possibility of success for both the franchisor and franchisee(s). Brand-name recognition and customer loyalty is greatly enhanced through standardized customer service that leads to shared long-term success. Stanworth, Price, and Purdy (2001) summarized the advantages of global franchising to the franchisor as follows: fewer financial resources required; raw materials can be produced internally; less susceptibility to political, economic, and cultural risks; and franchises are more familiar with local laws, language, culture, and business norms and practices. [...]
[...] The reality is--it is that good. It allowed me to literally go into business, day-one, without spending money on product development or training tools--the ideal scenario for getting into business." - B.K., USA "Having spent over a year evaluating reputable franchises, what differentiated WSI was the actual start-up and running costs of the business. No stock, hiring staff or premises rent is required--running costs are much lower than that being offered by some other global franchises." - M.S., Ireland "The Internet is universal to everyone's application, whether it's business, personal, educational or organizational - it has such scope that I see everybody as a prospect. [...]
[...] The trade off for franchisees, however, is that an unscrupulous franchisor which doesn't comply with the law by providing the required disclosure document, or who misdiscloses its financial history, background, sales figures or other material information, or who sells a franchise before the cooling off period expires, can be dealt with by the courts in Alberta much easier than in British Columbia. And in such cases, the franchisee can get out of the deal quicker and easier. British Columbia has no legislation which specifically protects franchisees, or requires franchisors to provide a “disclosure document” to persons interested in buying franchise rights. [...]
[...] - The official business link to the U.S. government www.business.gov The world - Franchising.com (information about franchising in all aspects and franchise opportunities) www.franchising.com - The complete franchise resource www.franchise1.com (or www.FranchiseHandebook.com) - The International Franchise Association (IFA) www.franchise.org - Franchiseconsulting.net www.franchiseconsulting.net - The Franchise magazine www.thefranchisemagazine.net The United-Kingdom - The British franchise Association www.british-franchise.org (or www.thebfa.org) - The UK Franchise Directory online www.theukfranchisedirectory.net - Franchise Direct (UK and Ireland) www.franchisedirect.co.uk/ Ireland - The Irish Franchise Association www.irishfranchiseassociation.com Canada - The Canada's Business and Consumer Site www.strategis.ic.gc.ca/engdoc/main.html - The Canadian franchise Association www.cfa.ca Resources Title of the Author Internet source Publicatio document n date opportunitie Stebbins s are many and varied” or J. [...]
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