Back to Basics: What is Franchising?

%Franchising Philippines
Most sought after franchise - McDonalds.

Franchising is a contract.  It is a partnership between a corporation and an individual. The contract is to use and capitalize on the company’s successful business model and/or it’s existing brand awareness (most often called Goodwill) for a faster return of capital.

So that means if you start a franchise, you are not buying rights or a business, and you are not buying your franchise.  You merely are capitalizing on it. What you will own are the assets you used to act upon the franchise agreement. And that includes the building for your location (if you decide to build your own) and the equipment you invest on.

Franchisors must be (a) have a track record of successful business system and (b) the business system must be easy to duplicate, to work at their best.

When you start your franchise business, you are under a joint commitment under other franchisees to get and keep customers and maintain the reputation of the franchisor company. You are also legally bound to follow the system of the franchisor.

That’s pretty much franchising is. Next time I will discuss the benefits of franchising.

You can also see these related posts:

  1. What Are the Advantages of Franchising?
  2. Is Franchising For You?
  3. Welcome to Food Cart Franchising Philippines
  4. Maybe Small, but Indeed Terrible – Micro Business Franchising: The (Micro) Response to Economic Problem with Guaranteed Macro Upshot

Comments

  1. dona pilapil says

    hi 🙂
    im dona po, we’re working in a research about food cart and your blogs is a big help for us. We would want to ask po if alam nyo po kung may ilang percent po kaya ang mga food cart franchise sa isang lugar? your response will be a big help po. thanks po.

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