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

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Once a critical mass is overcome, the local institutional framework evolves to include a new social cognitive perception that is more fertile for entrepreneurial activity. As a consequence, the acceptance of entrepreneurial activity within the region becomes socially embedded.

The argument that supports this lies on the evolutionary institutional path that some regions adopt, which can gradually lead to the embedded character of informal institutions as a result of their cultural content. However, formal institutions are subordinate to informal ones in the sense that they are the deliberate means used to structure the interactions of a society in line with the norms and cultural guidelines that make up its informal institutions.

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

• 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.

The franchiser has to own the intellectual and/or industrial copyrights that make the subject of the franchise and has to provide permanent technical and commercial assistance, for the whole duration of the existence of the agreement rights.

Because the law doesn’t set any sanctions, the franchise agreements have to regulate this issue in detail.

Competition Law completes the Franchise law with the provision that the Competition Committee has to be made aware of if any franchise system grows to a market share of 10% and, cumulative, a margin of Euro 10 billion.

n order to not fall under the incidence of the anti-trust legislation and to avoid sanctions due to breaking the legal dispositions, the signers of the agreement can approach the Competition Committee to be granted an exception, individually or collective, from the provisions of the Competition Law. These exceptions are granted when the positive effects of the agreement exceed the negative effects.

The adhesion to the EU made it necessary for businesses to own recognized certifications by EU: HACCP (for food industry). These certifications are also a condition required to companies that want to participate to the auctions organized by Government or private own companies; this is also the case of companies in cleaning industry, as they are required ISO quality certifications, ISO environment certifications and ISO personnel certifications so they can fully enjoy the trend of cleaning services externalization.

The provisions of the Franchising Law for before signing the franchise agreement step and the franchise agreement are as follows:

Prior signing the franchise agreement

For prior agreement, the Romanian law stipulates that the franchiser has the obligation of providing the potential franchisee with all the needed information regarding:

• the accumulated and conveyable know-how,

• the financial terms of the contract and

• details about the selling prices for the products, services or technologies, if there are any purchasing obligations.

Also, since the date of adhesion to the EU, Romania applies custom duties set on annual basis by the European Committee, as well the restriction measures or prohibition also adopted by the European Committee.

As a result of applying TARIC (Integrated Tariff of the European Communities) – designed to show the various rules applying to specific products when imported into the EU – to most of businesses importing goods from outside EU, after Romania’s adhesion to EU the custom duties had lowered (mainly for industrial goods), while for other goods (mainly agriculture products) they had raised. Standard VAT rate is 19%.

Romanian market has potential for US franchises in industries such as: manufacturing technologies, fast-food (small units requiring start-up investments under $ 200,000), business management, human resources, training, cleaning services, automotive, foreign languages education, hotels, with an investment of $ 2,000,000. American production franchises that can use raw materials from Europe are preferred.

Along with the Franchise Law, some stipulations of the Competition Law no. 21/1996 are applied, especially the instructions for enforcing Art. 5 for the vertical agreements which regard elements found, usually, in the franchise agreement: exclusiveness clauses, sharing the markets and the suppliers, a selection of approved suppliers, of the selling prices.

The two laws complete one another to assure a good and competitive environment to franchising in Romania.

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See here the full story provided by the IMO’s CEO Eugene Driga the Europe Reporter for BlueMauMau