Franchising is most often defined as a system of cooperation and mutual business relations between independent companies associated with franchise agreements. Franchising occurs when a company - the owner of products and services (the franchisor) provides an opportunity for a particular person or group (franchisee) to distribute his products or services, use his name and sign, as well as the business system, and the franchisee undertakes to do business under precisely defined conditions.
The franchisor transmits its already-tested business system, trademark, manuals, equipment, training, experience and support services. The franchisor has certain control over the way the franchisee operates. In return, the recipient of the franchise pays the provider the initial fee and the fee for using the trade name and business mode.
The form of business offered by the franchise is the closest guarantee for success in today's market. Franchise business provides a safer start to business and greater likelihood of success than in independent business. All research has shown that starting a business in the franchise system very rarely fails, and when this happens, the most common reason is that the franchisee did not keep the system of work and procedures. Another reason why it is wise to buy a franchise is that the franchise financial operations can be thoroughly explored before it comes in high costs. When you yourself start a business, you always work at risk.
The franchisor, together with its franchisees, creates a franchise network and is responsible for ensuring the network's operation and growth. Thanks to a common brand, the franchise network quickly builds identity and reputation.
The franchisor must take into account the following:
must respect the relationship between the franchisor and the contractor himself
it can not in any way compromise the reputation of the network, ie, of all other franchisees
it should not neglect the trust of its customers, as it does not harm itself, but the whole network.
Forms of franchising:
Single unit or direct franchising is the simplest form of franchise business where the franchisor sells the right to operate under his name only in one business unit;
Master franchise is a business in which the franchisee recipient has the right to recruit other recipients for the same provider in the contracted territory.
Premium franchise is a form of business that allows you to take on the leased office of Fly Fly Travel.
* Used data from the Center for franchising, Serbian Chamber of Commerce