Franchising is a commercial form (born in the US) where the parent company (Franchisor) through a franchise agreement grants a distributor or retailer (Franchisee) the right to market its products or services using the brand of the Franchisor, in exchange for the payment of an Entry Fee and any royalties. This contractual formula allows the Franchisor to rapidly extend the distribution and the Franchisee to reduce the risk of starting the business.
Types of Franchising in the US
In the US, according to the department of commerce and on the basis of practice, there are two types of franchising: product distribution and what is called “business format”.
“Product distribution” Franchise
Product distribution franchises sell Franchisor products and rely on agreements between vendor and retailer. Generally, the franchisor grants the use of its trademarks to franchisee, but does not provide the partners with the methods to handle the business. In the USA, this Franchise formula is used in the distribution of nonalcoholic beverages (Pepsi), in the marketing of cars and trucks (Ford), and for the distribution of gasoline at service stations (Mobil).
“Business Format” Franchise
“Business Forms” franchises not only sell products or services under the Franchisor’s trademark, but operate the business according to operating techniques experienced by the Franchisor. The Franchisor provides the Franchisee with training, marketing tools, and know-how for point-of-sale management. Examples of Franchise (Business Format): fast food restaurants (McDonald’s), car services (Midas), hotels (Holiday Inn), real estate agencies (Re / Max), supermarkets (7-eleven). Opening a Franchise business or launching your Franchise in the US, where this formula is widely spread and used, can be a great business opportunity. Our consultants will be on your side in pursuit of franchise activities that are more consistent with you or support you in all the necessary legal and operational steps to create your own franchise concept to be launched in the US.