Franchise
 
   
   
What is Franchising?
 
When you think about franchising, you probably think McDonald’s, Starbucks, or 7-Eleven. You would be right, but there is much more to franchises than just retail businesses.
 
Franchising is a way of going into business for yourself with less risk and greater benefits of being by yourself. It involves a business relationship in which the franchisor, the owner of the business provides an individual, the franchisee, the right to market and distribute the franchisor’s goods or services as well as to use the brand for a fixed period of time.
 
Two main types of franchising formats exist: product distribution franchises and business format franchises.
 
Product distribution franchise
  • The franchisor typically licenses its trademark and logo to franchisees
  • Franchisees manufacture and distribute the products within a specific territory or location
  • The most common businesses for this type of franchise are motor vehicle dealerships, soft drink bottlers, and gas stations
Business format franchise
  • This is the more common of the two types of franchises
  • The franchisee is given the rights to use a company’s name and logo
  • The franchisee is also provided with a complete method to operate a business, including operations manuals, training, marketing, and operational support
  • The most predominant type of this franchise in Hong Kong are fast food franchises which became popular with the introduction of US franchises such as McDonald’s, KFC, and Pizza Hut.
The business format franchise can be compared to a “marriage” between the franchisor and the franchisee. It should be a win-win relationship where the franchisor gets to expand its brand without heavy capital investment and the franchisee benefits through access to established business systems and lower risk than going into business as an individual.
 
The franchise relationship, like a marriage, is legally bound where the full obligations and responsibilities of both parties are covered in a detailed franchise agreement. Franchise agreements are dependent on the nature of the business and vary greatly in length and conditions; therefore, it would be virtually impossible for any two franchises to have identical agreements. Ultimately, the franchisor needs to retain control over standards and other critical elements to the ongoing success of the business system. 
 
The world of franchising can certainly be a way to make business a whole lot easier for franchisees, but that doesn’t mean that there isn’t a lot to learn about how franchise business can differ from individually run businesses. If you have ever considered a franchise opportunity, the following topics are a must for you:
  • The pros and cons of a franchise
  • What to know before buying a franchise
  • Choosing the right franchise for you
  • Top 10 reasons to own a franchise
  
   
The above are some of the highlight topics we have coming up. If you would like to receive this information and more, please fill in the form below. Thank you.



  
     
   
   
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