The creation and development of a new brand in the market will take a lot of time, effort and money to build a well-known brand name. Therefore, a form that many people choose is franchising from existing brands.
Watching: What is a Franchise?
Franchising allows investors to make quick money from other people’s pre-built brands. This article will help readers understand what franchising is and the popular franchise models today.
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2. Popular franchise models today
1. What is franchising? trading products, business models, and ways of doing business based on their pre-existing business forms and methods on the market.
In return, the buyer will have to pay a certain amount or a certain percentage of the revenue from selling the product to the franchisor.
In general, the exchange conditions will be subject to the agreement of the two parties based on the actual situation and recorded in the franchise contract.
2. Popular franchise models today
**Comprehensive Business Franchise
With this franchise model, the seller and the buyer will franchise at least four types of assets:
+ Production and business know-how;
+ Products and services;
+ Brand system;
+ Strategic models, management policies.
Franchise contracts in this model can be up to 30 years. Buyer will have to pay fees such as:
+ Initial franchise fee,
+ Operation fee,
+ Cost of shops, design, purchase of equipment, advertising
…
** Franchise is not comprehensive
Franchise cases under a non-comprehensive model will usually only be authorized to franchise one of the following types of assets:
– Franchise product distribution: The franchisee does not directly produce products, but only focuses on distribution to the market.
– Franchising production and marketing formulas: The seller provides the business rights and supports the organization, operation and marketing activities for the buyer.
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– Franchising under the same brand name: This type often appears in companies providing highly specialized services, all kinds of business and legal consulting.
– Licensing of brand use: This form of franchising the use of trademarks, for the production of goods not in the same category.
** Franchise with capital investment
This model of franchising is simply understood as the fact that the seller contributes capital to the franchise facility.
This way, the seller can become more deeply involved in the buyer’s business.
** Franchise with management participation
This franchise model is different from the above models because the franchisor will provide both management and operating department to the buyer.
It is suitable for those sellers who need to manage the quality of the franchise chain. Typically, the Marriott hotel chain has been applying this franchise model.
See also: What does Bcc contract stand for, Business Cooperation Contract (Bcc Contract)
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