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.
Archive for the ‘Franchising facts’ Category
The Franchise Agreement
Tuesday, January 26th, 2010Opportunity cost
Thursday, 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
Sunday, January 11th, 2009The Franchise Show – London, UK on February 6-7 2009
Looking for quality partners in the field of franchising? Let the U.S. Commercial Service help you find the best U.S. Franchisors to meet your needs. We can arrange introductions to the companies listed below — simply select the U.S. companies that interest you and receive a detailed profile, their contact information and have yours sent to them. Choose to have the U.S. Commercial Service make the introductions or meet these companies independently.
Why do franchisors fail?
Friday, 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
Franchise Expo 2008 Paris – eye witness
Friday, 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
Why aren’t you gambling your own savings, Mr Kroc?
Friday, April 11th, 20081. I picture the following: one of the first potential franchisees knocks on Ray Kroc’s door and asks him “Please don’t take my question personally, but why don’t you develop your business gambling your own money, like White Castle Fast Food Network has been doing since 1921?”
Papa John’s Chases Away Romanian Franchisees
Friday, April 4th, 2008It is easier to become a Papa John’s franchisee in the US than in Romania!
I was very glad to encounter Papa John’s – #36th franchise system in the world – last Saturday at Rofrancize, the Romanian franchise fair that took place in Bucharest. Romania is the 7th country in European Union, size-wise, but Papa John’s attendance to this fair it was this company’s first presence in Romania.
In Romania the medium growth rate of any franchise is about 20% per year. But, due to the requirements upon their (future) franchisees, Papa John’s risks to chase away its potential franchisees. (more…)
Franchise Expo comparison
Wednesday, April 2nd, 2008A Look at the Usefulness of Franchise Fairs
In the 19th century when an affluent young lady reached proper age, a ball was organised for her, and thus she was introduced to society. Now consider this:
* At the International Franchise Expo in Washington DC (11-13 April 2008) no Top 10 Global Franchises for 2008 of Entrepreneur Magazine franchise announced its participation.
* At the Franchise Expo in Paris , France, there were some 350 exhibitors. But only 4 of those are from Top 10.
The “big players” avoid franchise fairs, which are largely useful for smaller players to create brand awareness. The big names from US participate more at international fairs, mostly through the local master franchisees.
* In Romania – the franchise twilight-zone – the situation is even more dramatic. This year, at Rofrancize, 50% of the local franchises participating at the fair, came there before having signed even a single franchise agreement.
As a common factor between the 3 fairs, McDonald’s is not among the exhibitors!
SoupMan Bid to Turn ‘Seinfeld’ Fame Into Empire Goes Off the Boil
Friday, October 12th, 2007Author: Jim COEN
David B. Caruso, Associated Press reports:
The chef who inspired the Soup Nazi character on “Seinfeld” makes a heck of a crab bisque, but a group of stewed investors says he’s having problems expanding his popular stand into a franchise empire.
Soupmaker Al Yeganeh closed his original Manhattan shop, famous for its strict ordering rules, in 2004 to focus on franchising Original SoupMan stores across the country. The company launched around 40 stores in its first two years and introduced its frozen soups to groceries.
Bagel Franchises have Reinvented Themselves
Friday, October 12th, 2007Author: Jim COEN
In 1996, the bagel business was taking off, with several franchises expanding rapidly across the country. Franchises of Brueggers, Einstein Bros., Manhattan, Noah’s and Chesapeake were selling like hot cakes (bagels that is).
The prospects for the bagel business altered dramatically in June 1997 when Dunkin’ Donuts announced that its 2,000 stores would begin to sell bagels. This, in one stroke it became the largest bagel retailer in the nation.
At about the same time fresh bagels were being introduced in supermarkets across the country. In 1996 Modern Baking Magazine reported that Fresh bagels sales were up 50% in supermarkets and represented over $125 million in sales nationwide. By 2000 the total was over $400 million. (more…)
