Franchising is a system through which services (goods and technologies) are launched on the market. It is based on the close and continuous cooperation of legally and financially separated and independent businesses, a franchisor and its franchisees. A franchisor guarantees its franchisees the right and at the same time imposes on them the obligation to operate business activities in accordance with the franchisor’s concept.
The right entitles and bounds a franchisee to use the franchisor’s company’s name and/or the franchisor’s trade mark and/or service mark and/or other industrial and/or intellectual property rights as well as know-how, business and technical methods, and procedural system for direct or indirect payment within and for the duration of the written franchising agreement concluded for this purpose between the parties and with the continuous commercial and technical support on the part of the franchisor.
A franchisee benefits from the experience acquired from the franchisor together with the purchase of a franchise concept. The feasibility of the concept and the significant position in the market are basic pillars of a franchising system. A franchisee can achieve economic success with more certainty and more quickly.
Continuous support and assistance from the franchisor is a standard and is absolutely usual in franchising systems. Special services on the part of a franchisor include strong support from the franchise headquarters. A franchisee can rely on wide support from the headquarters in almost all areas. A franchisee pays continuous franchise fees, sometimes also called licence fees, as consideration for these services.