Examples of franchise agreement in the following topics:
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- Prior to a franchisee signing a contract, the US Federal Trade Commission regulates information disclosures under the authority of The Franchise Rule .The Franchise Rule requires that a franchisee be supplied a Uniform Franchise Offering Circular (UFOC ) or Franchise Disclosure Document (FDD ) prior to signing a franchise agreement, a minimum of ten days before signing a franchise agreement.
- Once the Federal ten-day waiting period has passed, the Franchise Agreement becomes a State level jurisdiction document.
- Each state has unique laws regarding franchise agreements.
- The content of a franchise agreement can vary depending on the franchise system, the state jurisdiction of the franchisor, franchisee, and arbitrator.
- Franchising agreements contain many legal documents that must be understood and filled out.
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- A franchise agreement can also have disadvantages for both the franchisor and the franchisee.
- While there are many advantages for the franchisor in entering a franchising agreement, some of the potential risks are:
- - Difficult to control activities of franchisees: In any franchise agreement (particularly when there is geographical separation between the franchisor and the franchisee), it can be difficult to control the activities of the franchisee and ensure that their activities are up to standard.
- - Not as quick a method of growth as mergers or acquisitions: M&A allows companies to expand very rapidly, whereas entering into franchising agreements means that the franchisor enters agreements with numerous individuals over time, and has to wait for them to start up and begin operations (instead of taking over existing operations).
- Royalties are paid periodically during the life of the franchise agreement.
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- A franchise agreement can have many benefits for both the franchisor and the franchisee.
- The rest are operated through franchise and joint venture agreements, with profits being made through franchise fees and marketing fees, and at times through rent, as often the franchisee does not own the location of the restaurant.
- Franchisors benefit from franchise agreements because they allow companies to expand much more quickly than they could otherwise.
- The franchisee also has numerous advantages that come from entering a franchising agreement, including:
- - The new franchise owner gains many benefits from the association with the main franchise company.
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- On this basis, there are three different types of franchise:
- Fast food restaurants are good examples of this type of franchise.
- Through this kind of agreement, manufacturers allow retailers to distribute their products and to use their names and trademarks.
- Tire stores, for example, operate under this kind of franchise agreement.
- Through manufacturing franchises, a franchiser grants a manufacturer the right to produce and sell goods using its name and trademark.
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- In franchising, an organization (the franchiser) has the option to grant an entrepreneur or local company (the franchisee) access to its brand, trademarks, and products.
- Franchising is a particularly useful practice when approaching international markets.
- Franchising has some weaknesses as well, from a strategic point of view.
- Most importantly, organizations (the franchisers) lose a great deal of control.
- While the risk of franchising is much lower in terms of capital investment, so too is the returns derived from operations (depending on the franchising agreement in place).
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- Home franchise operations have made franchising more accessible and affordable than ever, but still require knowledge and expertise.
- One important factor leading to the record number of franchises in recent years is the proliferation of home based franchise opportunities.
- This was mainly to cover the franchise payment and to establish a real store or business office, as directed by the business agreement.
- Because of enormous charges in traditional franchise companies, very few people meet the expense needed to become franchise owners.
- In considering franchises, you should see if you are well-suited to particular franchise options by determining your areas of expertise.
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- Co-owners generally sign legal agreements specifying each partner's duties.
- Partnership agreements also may provide for "silent partners," who invest money in a business but do not take part in its management.
- Sales increases by retail franchises between 1975 and 1990 far outpaced those of non-franchise retail outlets, and franchise companies were expected to account for about 40 percent of U.S. retail sales by the year 2000.
- Franchising probably slowed down in the 1990s, though, as the strong economy created many business opportunities other than franchising.
- Nonetheless, many franchise establishments do survive.
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- Under a licensing agreement, a firm (licensor) provides some technology to a foreign firm (licensee) by granting that firm the right to use the licensor's manufacturing process, brand name, patents, or sales knowledge in return for some payment.
- A licensing arrangement contains risk, in that if the business is very successful, profit potentials are limited by the licensing agreement.
- Franchising represents a very popular type of licensing arrangement for many consumer products firms.
- Holiday Inn, Hertz Car Rental, and McDonald's have all expanded into foreign markets through franchising.
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- From 2001 to 2005, the franchising sector grew at a faster pace than many other sectors of the U.S. economy .
- Payroll generated by franchised businesses grew 21.6% compared to 15.4% for all businesses.
- The International Franchise Association reported that 2012 would be the year that franchising rebounds.
- The economic outlook published for 2012 projects an increase of 1.9% in franchise establishments.
- Franchising is the practice of using another firm's successful business model.
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- Let's take a quick look at the benefits of global franchising, and where the potential pitfalls are:
- For the franchiser (i.e. the parent company), franchising allows rapid expansion with less risk and required capital (as some of this risk is assumed by franchisee, along with funding).
- A franchising model can provide both.
- The franchiser is outsourcing some amount of control and returns on investment to the franchisee.
- Convenience stores that franchise, such as 7-Eleven, operate quite similarly.