Description: A franchise is a legal and commercial relationship between the owner of a registered trademark and an individual or company that sells goods or services under that trademark. This business model allows franchisees to operate under the franchisor’s name and system in exchange for an initial fee and ongoing royalties. Franchises are popular in various industries, including food, retail, and services, as they offer entrepreneurs the opportunity to start a business with a proven model and the support of a recognized brand. The main characteristics of a franchise include the transfer of know-how, the use of the registered trademark, and compliance with operational standards set by the franchisor. This system not only benefits franchisees by reducing business risk but also allows franchisors to expand their brand and increase their market presence without bearing all the costs and risks associated with opening new locations. Franchising has become a pillar of modern commerce, facilitating the globalization of brands and the creation of jobs in various communities.
History: The concept of franchising dates back to the Middle Ages when monarchs granted rights to certain individuals to operate businesses in their territories. However, the modern franchise model began to take shape in the 19th century, with the expansion of companies like Singer Sewing Company, which allowed merchants to operate under their name. Throughout the 20th century, franchising solidified as a viable business model, especially in the United States, where brands like McDonald’s and Dunkin’ Donuts began to proliferate in the 1950s.
Uses: Franchises are primarily used in sectors such as food and beverage, retail, personal services, and education. They enable entrepreneurs to access a proven business model and an established brand, reducing the risk of failure. Additionally, franchises are an effective way for companies to expand their geographic reach and increase their revenue without bearing all the costs of opening new branches.
Examples: Examples of successful franchises include McDonald’s, Subway, and 7-Eleven, which have achieved significant global expansion. These brands have established standardized operating systems and provide ongoing training and support to their franchisees, contributing to their success and recognition in the market.
