What is a franchize and franchizing?

What is a franchize and franchizing?

A big lot of money for a saucer with a blue border – unless you do not dream of it? Any risks, continuous are favorable – a recognizable brand, the customer base, for a long time ready practices on conducting business – this charm of franchizing.

Quite so most of the beginning businessmen also understand what it is a franchize and franchizing. However actually, everything is not so attractive and not so profitable. Often happens, as franchisees appear at a loss, especially when it is necessary to pay penalties to the franchiser.

But let's understand these difficult uttered concepts in detail.

Franchize and franchizing

Actually, there is no difference between a franchize and franchizing, it the interconnected concepts. A franchize is that you buy from a brand, and franchizing is a process of purchase, the name of the transaction.

In franchizing, the one who sells the right of use of attributes of a brand – the franchiser, and the one who buys this right – the franchisee.

For the best understanding of difference of franchizing from a franchize we will look at definition of the term.

Franchizing is a form of the agreement between the franchisee and franchayzry on the right of use of a brand, trademark for the commercial purposes. At the same time, it is meant that the transaction is mutually advantageous for both.

Franchize cost

What the franchize differs from franchizing in – those that it is necessary to pay you for a franchize, and here the transaction of franchizing can be free. The franchize cost (right) means payment of a lump-sum contribution. This single contribution, and it you, actually also pay for purchase of the right. The more promoted company the franchiser, the is higher franchize cost.

But franchizing can be and free. You buy a franchize without lump-sum contribution, but the first years will act not as the partner, and as the director. The contract will cover this term and also conditions which you have to execute to become the partner.

Franchizing minuses

First, this set of the conditions which often aloud are not stipulated, and stated in contracts. Big brands have an opportunity to contain the headquarters of lawyers who create the intricate contracts favorable to franchisers.

Because of non-performance of conditions the rights of a franchize can deprive of you and will force to pay a solid penalty.

Secondly, from you it is required to suppress initiative and creative thinking completely. Here you thought up some innovation which could increase profit, but you have no right use it in business according to the contract.

And in general old residents of business say that franchizing disaccustoms to think independently and business kills. Someone thought up the scheme and millions of people have to it follow blindly. At such mentality, the number of financial geniuses will wither considerably.

Author: «MirrorInfo» Dream Team