Agreements, Contracts and Agreements, Franchise

Starting a Franchise in India

Starting a Franchise in India is an old hat but that always work, Franchising, since the economic liberalization of 1991, many foreign companies with strong brand names have established a presence in India through franchising like Hertz, Radisson, Kentucky Fried Chicken (KFC), Domino’s Pizza, Thank God it’s Friday (TGIF), Pizza Hut etc., In fact, Indian companies with strong brand recognition are also using the franchising route like MRF, NIIT, Apollo Hospitals.

Yo bro, What’s franchising?
The Blacks Law Dictionary defines a franchise as a license from the owner of a trademark or trade name permitting another to sell a product or service under that name or mark. There are at least two parties involved: (a) the franchisor, who lends his trademark; and (b) the franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor’s.

Breaking down the Characteristic Features of business like this type:
(a) A franchise arrangement
(b) The franchisor should have developed a business system or format.
(c) The franchisee makes a substantial initial capital
(d) The franchisor trains the franchisee
(e) Once the franchisee’s business commences, the franchisor support available to the franchisee
(f) The franchisor also regularly supervises the franchisee’s business operations.
(g) Consideration is paid by the franchisee to the franchisor for the rights licensed

Enriching em with types of Franchising Agreements:
(a) Invention Licensing Agreement: Inventor (Franchisor) firstly patents the invention and license the patent and design rights and the manufacturing and marketing of the invention.
(b) Trademark Licensing Agreement: Franchisor (the owner) of a trademark can grant a license to another Franchisee to use the trademark on goods, which are associated with that trademark. This type of an agreement may be for the manufacture, preparation, marketing, presentation, and sale of goods.
(c) Character Merchandising Agreement: In such an agreement, the name of a famous entertainment or sports personality or probably a fictional or graphical character is licensed to be used on certain products.
(d) Dealer or Distributor or Marketing arrangements: Franchisee adopts the business operations model of the franchisor. Examples; in cases of dealerships with automobile companies, food and consumer goods, petrol pumps and gas stations.

What are the good to take stuffs in doing a business on franchise model?
Capitalizing and benefiting from the Franchisor brand name. Elimination of unnecessary expenses. Support from the franchisor while operating the business. Benefit from the franchisor’s advertising campaigns. Benefit from the franchisor’s negotiating and bulk purchasing power.

Alrighty, Any Trade-offs?
Imposition of controls and supervision by the franchisor. Heavy initial capital investment, in addition to consideration for using the franchisor’s brand. Franchisor’s policies that would be a directly applicable. 

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