The principal document that sets forth the binding rights and obligations of
each party to the franchise relationship is known as the franchise agreement.
The franchise agreement contains the various provisions binding on the parties
for the life of their relationship and therefore must maintain a delicate
balance of power. On one hand, the franchisor must maintain enough control
in the franchise agreement to enforce uniformity and consistency throughout
the system, yet at the same time be flexible enough to anticipate changes in
the marketplace and modifications to the franchise system and to meet the
special considerations or demands resulting from the franchisee’s local market
conditions.
The franchise agreement can and should reflect the business philosophy
of the franchisor and set the tenor of the relationship. A well-drafted franchise
agreement will reflect the culmination of literally thousands of business
decisions and hundreds of hours of strategic planning, market research,
and customer testing. The length, term, and complexity of the franchise
agreement will (and should) vary from franchisor to franchisor and from industry
to industry. Many start-up franchisors make the critical mistake of
‘‘borrowing’’ terms from a competitor’s franchise agreement. Such a practice
can be detrimental to the franchisor and the franchisee because the agreement
will not accurately reflect the actual dynamics and financial realities of
the relationship.
The Franchise Agreement
January 26th, 2010Tags: agreement, franchise
Opportunity cost
September 17th, 2009Free lunch
There’s no such thing. See opportunity cost. 
The true cost of something is what you give up to get it. This includes not only the money spent in buying (or doing) the something, but also the economic benefits (UTILITY) that you did without because you bought (or did) that particular something and thus can no longer buy (or do) something else. For example, the opportunity cost of choosing to train as a lawyer is not merely the tuition fees, PRICE of books, and so on, but also the fact that you are no longer able to spend your time holding down a salaried job or developing your skills as a footballer. These lost opportunities may represent a significant loss of utility. Going for a walk may appear to cost nothing, until you consider the opportunity forgone to use that time earning money. Everything you do has an opportunity cost (see SHADOW PRICE). ECONOMICS is primarily about the efficient use of scarce resources, and the notion of opportunity cost plays a crucial part in ensuring that resources are indeed being used efficiently. Credit: The Economist
The Franchise Show 2009 – London, UK
January 11th, 2009The Franchise Show – London, UK on February 6-7 2009
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Role Models in Romanian entrepreneurship
January 1st, 2009Entrepreneurship is increasingly being recognised as an indispensable tool for consolidating the market based economic system adopted by transition economies. Despite this, little is known about the factors that influence the decision to become entrepreneurially active in these countries. Academic research has recently demonstrated that differences in entrepreneurship levels are in-part explained by the varied impact across territories of entrepreneurial role models. Because Romania passed from a formal institutional framework based on central planning to one oriented towards a market economy, it had a near absence of entrepreneurial role models when it abandoned central planning. Read the rest of this entry »
Why do franchisors fail?
August 1st, 2008if it is not through the dishonesty or the incompetence of franchisees, why do franchisors fail?
Below are noted the reasons for franchisor failure :
· Under capitalization of the franchisor
· Too rapid expansion of the franchise system
· Poor product or service
· Poor franchisee selection
· Franchisor greed
· External factors
· Devaluation of the Romanian currency
· An increase of import duties
· The withdrawal of an important source of products
· An aggressive and cheaper competitor
· Severe downturn in the economy
More about the franchise agreement
May 23rd, 2008Stipulates, among others:
- setting the duration of the franchise agreement of such manner that the franchisees has the time to get the return of his/her investments,
- setting clearly and without any ambiguities the termination clauses,
- setting the financial obligations of the beneficiary,
- protection of the know-how conveyed by the franchiser by including non-competition clauses and precisely ruling the terms in which the shares can be assigned. Read the rest of this entry »
Prior signing the franchise agreement
May 21st, 2008The terms of the franchising agreements usually range between 2 to 6 years. Big franchisers tend to offer contracts with shorter terms in order to be able to adapt quickly to the changes of a developing market or still not established, like the Romanian market is. Read the rest of this entry »
Romania and the franchise exports
May 12th, 2008Romania agreed that the community trade mark (European Council Regulation no. 40/94/EC of December 20, 1993) should produce effects in its respect as well in order to have an unitary effect throughout the Union’s entire territory. Read the rest of this entry »
Franchise Law Romania
May 10th, 2008Even since 1998, Romania has recognized the necessity of promoting and supporting the franchising by setting a franchise specific legislation, the Law no 79/1998. The Law defines the basic principles of a franchise agreement as a sustained communication between persons or corporate entities whereby the Franchiser grants a Franchisee the right to exploit or develop a particular know-how or intellectual property right. Read the rest of this entry »
Franchise Expo 2008 Paris – eye witness
May 2nd, 2008“The biggest franchise fair in the world,” French franchisors were proudly announcing. The Franchise Expo Paris had some 450 brands, more than at International Franchise Expo in Washington D.C.. While some 80% of exhibitors were French, there were 30,000 estimated visitors, most middle-aged. In contrast, exhibits were often staffed by those under 30 years of age. In France, the average age of a new franchisee has grown to 44. According to the yearly research made by the CSA institute , while the percent of franchisees aged between 18 to 34 years-old dropped from 22% in 2004 to 16% in 2007, the percent of franchisees 50 – 64 grew from 23% to currently 29%.
French Franchisors Want to Export, Americans to Import
Interest in Franchising a Business is Higher than Buying a Franchise
See here the full story provided by the IMO’s CEO Eugene Driga the Europe Reporter for BlueMauMau
