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What is a franchise?

On Behalf of | Aug 25, 2017 | Commercial Real Estate |

There are a variety of different benefits associate with franchising but if you are considering opening a franchise business, you may wonder what they are. At its most basic level, a franchise business system allows entrepreneurs purchase rights to open a run a smaller location of a larger company. A contractual franchise agreement is signed between the parties outlining the rules for running the franchise business.

It is important to keep in mind that a franchise business, or franchisee, must be operated according to the requirements set forth by the franchise company which is referred to as the franchisor. The franchise contract will likely outline terms including the location of the franchise; training of staff and franchise ownership; advertising; trademark and copyright obligations; contract renewal options; and a termination provision.

There are a variety of benefits to owning and operating a franchise. The franchise comes with the familiarity and name recognition of the parent company. In addition, the franchisee can receive training from the parent company to help them successfully operate the franchise. It is an opportunity to benefit from an established business and business model and the support of the franchisor. It is important to keep in mind, however, that the rules for running a franchise, and contract requirements, can be strict and a franchise can be costly so it is helpful for the franchise owner to thoroughly understand the contract and contract obligations.

Franchising is an excellent opportunity with significant potential for entrepreneurs to consider. As is always true when engaging in commercial real estate and business transactions, it is important to understand the legal resources available to help the parties achieve a successful transaction and business future.

Source: Chron.com, “Definition of a Franchise Business,” Accessed Aug. 24, 2017