Which Of The Following Is True Of A Franchise Agreement

The legal definition of franchising in Spain is an activity in which a company, a franchisor, another party, the franchisee, grants, for a given market and with financial compensation (either directly, indirectly, or both), the right to use its own marketing system of products or services already used by the franchisor with sufficient success and experience. 58) A (n) – is an amount that the franchisee pays to the franchisor for the continued use of the commercial name, property and franchisor support, often calculated as a percentage of the franchisee`s gross revenue. The word “franchise” is derived anglo-French – from the franc, which means free – and is used as both a word and a verb (transitif). [1] For the franchisor, the use of a franchise system is another strategy for the company`s growth in relation to the expansion by the company`s outlets or “chain stores”. The adoption of a business growth strategy for the franchise system for the sale and distribution of goods and services minimizes the risk of investment and liability of the franchisor. Each part of a franchise has several interests to protect. The franchisor participates in safeguarding the brand, controlling the business concept and safeguarding the know-how. The franchisee is required to provide the services for which the brand has been made famous or famous. A large standardization is required. The place of duty must bear prominently the brands, logos and marks of the franchisor. Uniforms worn by franchise staff must have a certain design and colour. The service must be consistent with the model that the franchisor follows as part of the successful franchise business.

As a result, franchisees do not have full control over the business, as they would be in the retail business. In Australia, franchising is governed by the Franchise Code of Conduct, a binding code of conduct under the Trade Practices Act of 1974. [20] The ACCC governs the Franchise Code of Conduct, a binding sector code applicable to parties to a franchise agreement. [21] This code requires franchisors to submit a disclosure document that must be submitted for information to a potential franchisee at least 14 days before the end of the contract. A franchise can be exclusive, non-exclusive or “single and exclusive.” In the 1850s, Singer Company implemented a franchise plan for the distribution of its sewing machines. However, the company failed because the company did not make much money, although the machines sold well. Traders, who held exclusive rights to their territories, recorded the bulk of the profits as a result of the deep discounts. Some failed to push Singer products, allowing competitors to sell the company.

Under the existing contract, Singer was unable to withdraw the franchisees` rights or send its own representatives. Then the company began to buy back the rights sold. The experiment proved to be a failure. It may have been one of the first times a franchisor failed, but it was far from the last. (Even Colonel Sanders failed to support his franchising efforts in Kentucky Fried Chicken.) However, the Singer project did not end franchising. Franchising is a sui generis contract that bears the characteristics of several explicitly regulated contracts, such as the . B; Agency, sales contract, etc.