Franchising has certain advantages and disadvantages for companies wishing to expand into new territories and foreign markets. The main advantage lies in the fact that the company is not alone in bearing the development costs and risks associated with opening a foreign market, since the franchisee is generally responsible for these costs and risks and is responsible for setting up a profitable business as quickly as possible. [11] Through franchising, a company has the potential to build a global presence quickly and even at low cost and low risk. [11] Three significant payments are made to a franchisor: (a) a royalty for the brand, b) a refund for the training and advice granted to the franchisee and c) a percentage of the turnover of each activity. These three taxes can be grouped into a single administrative tax. A “disclosure” tax is separate and is always a “frontal end tax.” Often, training time – the costs of which are largely covered by upfront costs – is too short in cases where complex devices need to be used and the franchisee has to learn denhand himself. Training time should be appropriate, but in cheap franchises, it can be considered expensive. Many franchisors have set up corporate universities to train employees online. This is in addition to the provision of literature, sales documents and e-mail access. The word “franchise” is derived anglo-French – from the franc, which means free – and is used as both a word and a verb (transitif).
[1] For the franchisor, the use of a franchise system is another strategy for the company`s growth in relation to the expansion by the company`s outlets or “chain stores”. The adoption of a business growth strategy for the franchise system for the sale and distribution of goods and services minimizes the risk of investment and liability of the franchisor. A franchise can be exclusive, non-exclusive or “single and exclusive.” The franchising boom did not take place until after the Second World War. However, the basics of modern franchising date back to the Middle Ages, when landowners entered into franchise agreements with customs officers who kept a percentage of the money collected and returned the rest. [3] The practice ended around 1562, but spread to other enterprises. [4] In the 17th century, for example, franchisees in England were granted the right to sponsor markets and fairs or to operate ferries. However, until the mid-19th century, when it first appeared in the United States, there was little growth in franchising. When developing a reasonable set of franchise agreements, each element of the franchise must be evaluated. Before lawyers begin to develop the agreements, it is essential for the franchisor to first develop its business plan and decide on all these important issues.
For most franchisors, it is important not only that they work with franchise professionals, but also work with experienced and qualified franchise consultants to design their franchise. The franchise agreement will settle everything about how the franchisee manages the new business and explain what they can expect from the franchisor. Learn more about what is written in the agreement and what it means if you decide to become a franchise or become a franchisee. The franchise in Australia began in the early 1970s significantly under the influence of U.S. fast food systems such as KFC, Pizza Hut and McDonald`s. [17] However, it was underway before that and a decade earlier in 1960 Leslie Joseph Hooker, as a franchise pioneer, founded Australia`s first national real estate network of real estate agencies Hooker. [18] [19] Under Australian law, all franchisors and franchisees are now required to comply with the Franchise Code of Conduct (“FCC”).
