Franchising is a partnership-based distribution system that allows new entrepreneurs to use an established business concept for a fee. The term franchise describes a cooperative distribution system between an existing company – the franchisor – and one or more company founders – the franchisees.
These are our Favorite 10 Franchises for Canadians to invest in:
|~ 6.1 %|
|~ 5.3 %|
|~ 6 %|
|~ 11.3 %|
|~ 12 %|
|~ 18 %|
|~ 11.3 %|
|~ 9 %|
|~ 8.8 %|
|~ 5.9 %|
On the basis of a franchise agreement, the franchisor grants his cooperation partners the right to use the business concept he has developed. The period during which the franchise system is operated between the partners is determined by the franchisor. For this period, the franchisee may use the name, design and business idea to sell goods or services.
The business idea has always been successfully tested and developed by the franchisor.
Thus the franchisee adopts a business model that is already functioning when setting up a business. In return, the franchisee must pay fees – so-called entry or franchise fees – to the franchisor in order to buy the licenses and rights of use. In many cases, the franchisee also transfers part of the profits generated to the originator of the business idea.