Examples of franchise agreement in the following topics:
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- Prior to a franchisee signing a contract, the US Federal Trade Commission regulates information disclosures under the authority of The Franchise Rule .The Franchise Rule requires that a franchisee be supplied a Uniform Franchise Offering Circular (UFOC ) or Franchise Disclosure Document (FDD ) prior to signing a franchise agreement, a minimum of ten days before signing a franchise agreement.
- Once the Federal ten-day waiting period has passed, the Franchise Agreement becomes a State level jurisdiction document.
- Each state has unique laws regarding franchise agreements.
- The content of a franchise agreement can vary depending on the franchise system, the state jurisdiction of the franchisor, franchisee, and arbitrator.
- Franchising agreements contain many legal documents that must be understood and filled out.
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- A franchise agreement can also have disadvantages for both the franchisor and the franchisee.
- While there are many advantages for the franchisor in entering a franchising agreement, some of the potential risks are:
- - Difficult to control activities of franchisees: In any franchise agreement (particularly when there is geographical separation between the franchisor and the franchisee), it can be difficult to control the activities of the franchisee and ensure that their activities are up to standard.
- - Not as quick a method of growth as mergers or acquisitions: M&A allows companies to expand very rapidly, whereas entering into franchising agreements means that the franchisor enters agreements with numerous individuals over time, and has to wait for them to start up and begin operations (instead of taking over existing operations).
- Royalties are paid periodically during the life of the franchise agreement.
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- Franchising agreements are a popular way of entering international markets, and have advantages and disadvantages.
- Licensing and entering franchise agreements are two ways to enter international markets.
- Compared to licensing, franchising agreements tends to be longer and the franchisor offers a broader package of rights and resources which usually includes: equipments, managerial systems, operation manual, initial trainings, site approval, and all the support necessary for the franchisee to run its business in the same way it is done by the franchisor.
- In addition to that, while a licensing agreement involves intellectual property, trade secrets, etc., while in franchising, it is limited to trademarks and operating know how of the business.
- Demand of franchisees may be scarce when starting to franchise a company, which can lead to making agreements with the wrong candidates.
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- A franchise agreement can have many benefits for both the franchisor and the franchisee.
- The rest are operated through franchise and joint venture agreements, with profits being made through franchise fees and marketing fees, and at times through rent, as often the franchisee does not own the location of the restaurant.
- Franchisors benefit from franchise agreements because they allow companies to expand much more quickly than they could otherwise.
- The franchisee also has numerous advantages that come from entering a franchising agreement, including:
- - The new franchise owner gains many benefits from the association with the main franchise company.
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- On this basis, there are three different types of franchise:
- Fast food restaurants are good examples of this type of franchise.
- Through this kind of agreement, manufacturers allow retailers to distribute their products and to use their names and trademarks.
- Tire stores, for example, operate under this kind of franchise agreement.
- Through manufacturing franchises, a franchiser grants a manufacturer the right to produce and sell goods using its name and trademark.
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- For the franchiser, the franchise is an alternative to building "chain stores" to distribute goods that avoids the investments and liability of a chain.
- The service has to be in accordance with the pattern followed by the franchiser in the successful franchise operations.
- So too the purchase of uniforms of personnel, signs, etc., as well as the franchise sites, if they are owned or controlled by the franchiser.
- Franchise agreements carry no guarantees or warranties, and the franchisee has little or no recourse to legal intervention in the event of a dispute.
- Most franchisers require franchisees to sign agreements that mandate where and under what law any dispute would be litigated.
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- Home franchise operations have made franchising more accessible and affordable than ever, but still require knowledge and expertise.
- One important factor leading to the record number of franchises in recent years is the proliferation of home based franchise opportunities.
- This was mainly to cover the franchise payment and to establish a real store or business office, as directed by the business agreement.
- Because of enormous charges in traditional franchise companies, very few people meet the expense needed to become franchise owners.
- In considering franchises, you should see if you are well-suited to particular franchise options by determining your areas of expertise.
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- A joint venture is a business agreement in which parties agree to develop a new entity and new assets by contributing equity.
- A consortium JV (also known as a cooperative agreement) is formed when one party seeks technological expertise, franchise and brand-use agreements, management contracts, and rental agreements for one-time contracts.
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- Under a licensing agreement, a firm (licensor) provides some technology to a foreign firm (licensee) by granting that firm the right to use the licensor's manufacturing process, brand name, patents, or sales knowledge in return for some payment.
- A licensing arrangement contains risk, in that if the business is very successful, profit potentials are limited by the licensing agreement.
- Franchising represents a very popular type of licensing arrangement for many consumer products firms.
- Holiday Inn, Hertz Car Rental, and McDonald's have all expanded into foreign markets through franchising.
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- From 2001 to 2005, the franchising sector grew at a faster pace than many other sectors of the U.S. economy .
- Payroll generated by franchised businesses grew 21.6% compared to 15.4% for all businesses.
- The International Franchise Association reported that 2012 would be the year that franchising rebounds.
- The economic outlook published for 2012 projects an increase of 1.9% in franchise establishments.
- Franchising is the practice of using another firm's successful business model.