The different types of franchising agreement and its interpretation
Franchising has become very popular all over the world in recent years. UK franchising especially has greatly increased in popularity in recent times. Last year alone the contribution of franchising to the economy had increased by over 5 billion pounds to 12.4 billion pounds. It is no surprise that franchising occupies a significant place in the UK economy.
The different types of franchising agreements Franchising has made a significant change in the economy of UK. The basic idea behind franchising is that a company gives another company or individual the rights to sell its products or services. Franchising however is more complex, as there are different types of franchising agreements. The types of franchising agreements can be divided into five categories, although each and every agreement differs in some way or the other. These five categories are, manufacturing franchises, business franchise ventures, product franchises, business format franchises and part time franchises. In manufacturing franchises, the agreement involves the franchisor allowing the franchisee to produce and sell its products using the franchisor’s trade mark. This agreement is very common in the food and beverage business. The franchisor receives a commission on every unit sold.
In business franchise ventures, the agreement involves the franchisee purchasing and distributing the product from the franchisor. In product franchises, the franchisor uses the agreement as a way of distributing the product. It allows the franchisee to use its name to distribute the product. Business format franchises are the most complicated and involves the franchisee investing in the company. Therefore, these are the different basic franchise agreements.