What is Franchising

A franchise is a legal and commercial relationship between the owner of a trademark, service mark, trade name, or advertising symbol and an individual or group wishing to use that identification in a business. The franchise governs the method of conducting business between the two parties. Generally, a franchisee sells goods or services supplied by the franchisor or that meet the franchisor's quality standards.

A franchise typically enables you, the investor or "franchisee," to operate a business. By paying a franchise fee, which may cost several thousand dollars, you are given a format or system developed by the company ("franchisor"), the right to use the franchisor's name for a limited time, and assistance. For example, the franchisor may help you find a location for your outlet; provide initial training and an operating manual; and advise you on management, marketing, or personnel. Some franchisors offer ongoing support such as monthly newsletters

Franchising is based on mutual trust between the franchisor and franchisee. The franchisor provides the business expertise (marketing plans, management guidance, financing assistance, site location, training, etc.) that otherwise would not be available to the franchisee. The franchisees brings to the franchise operation the entrepreneurial spirit and drive necessary to make the franchise a success.

In Australia franchising can be separated into 4 business models, Retailer-Retailer being the most common one:

• Manufacturer-Retailer – Where the retailer as franchisee sells the franchisor's product directly to the public. (eg. New motor vehicle dealerships).
• Manufacturer-Wholesaler – Where the franchisee under license manufactures and distributes the franchisor's product (eg. Soft drink bottling arrangements).
• Wholesaler-Retailer – Where the retailer as franchisee purchases products for retail sale from a franchisor wholesaler (frequently a cooperative of the franchisee retailers who have formed a wholesaling company through which they are contractually obliged to purchase. (eg. Hardware and automotive product stores).
• Retailer-Retailer – Where the franchisor markets a service, or a product, under a common name and standardised system, through a network of franchisees. This is the classic business format franchise.

You may ask why a business would franchise their business. When set-up correctly franchising is a win-win relationship where the franchisor is able to expand its market presence without eroding its own capital, and the franchisee gains through access to established business systems, at lower risk, for their own commercial advantage.

In Australia popular franchise opportunity includes:

• Restaurant
• Book Keeping
• Boost Juice
• Subway
• Coffee
• Jims
• Food
• Mcdonalds
• Car Wash
• Mobile Phone
• Toy
• Ice Cream
• Clothing
• Starbucks
• KFC