What is Franchising?

Franchising is a very specific method of distributing goods and services. It has been around in one form or another since man first began to engage in commercial enterprise. It has evolved from a simple grant of a right or privilege in the middle ages to the sophisticated business format franchise concept of today.



There are several different types of franchises, including:

Product Franchises

In this format, a manufacturer grants a franchisee the right to sell it's products, i.e. car dealerships and service stations.

Name and Process Franchises

This format allows the franchisee to use a special process, or recipe and to use the franchiser's name. Originally Kentucky Fried Chicken was structured this way as was One Hour Martinizing.

Business Format Franchises

Most franchising today falls into this category. This type franchising not only grants the right to use the name and sell the products or services of the franchiser but it also involves the transfer of the total way of doing business that has been developed by the franchiser. Specifically the franchiser transfers all its operating systems, technical expertise, marketing systems, training systems, management methods and essentially all relevant information, to the new franchisee. The franchiser also trains the new franchisee extensively up front and provides ongoing training and support throughout the life of the franchise agreement. Business format franchising is what franchising is all about today and is essentially why franchising is the most successful method of distributing goods and services in the economic history of the planet Earth.