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FRANCHISING
Ingles

The term 'franchising' can describe some very different business arrangements. It is important to understand exactly what you're being offered.

Business format franchiseThis is the most common form of franchising. A true business format franchise occurs when the owner of a business (the franchisor) grants a licence to another person or business (the franchisee) touse their business idea - often in a specific geographical area.
The franchisee sells the franchisor's product or services, trades under the franchisor's trade mark or trade name and benefits from thefranchisor's help and support.
In return, the franchisee usually pays an initial fee to the franchisor and then a percentage of the sales revenue.
The franchisee owns the outlet they run. But thefranchisor keeps control over how products are marketed and sold and how their business idea is used.
Well-known businesses that offer franchises of this kind include Prontaprint, Dyno-Rod andMcDonald's.

Other types of arrangement

Different types of sales relationships are also sometimes referred to as franchises. For example:
• Distributorship and dealership - you sell the product butdon't usually trade under the franchise name. You have more freedom over how you run the business.
• Agency - you sell goods or services on behalf of the supplier.
• Licensee - you have alicence giving you the right to make and sell the licensor's product. There are usually no extra restrictions on how you run your business.

Multi-level marketing

Some businesses offer franchisesthat are really multi-level marketing. Self-employed distributors sell goods on a manufacturer's behalf. You get commission on any sales you make, and also on sales made by other distributors yourecruit.

Advantages and disadvantages of franchising

Buying a franchise can be a quick way to set up your own business without starting from scratch. But there are also a number of drawbacks....