Franchising is a form of  business  which  allows  another business  organization  to supply their  goods and services  in a  specific market  place.

• There are two parties involve in franchise  business

• The company which  permits another  to sell goods under the trade  name of the franchise (Franchiser)

• The company which obtains  permission from the franchiser  (Franchisee)

The agreement between the franchiser and franchisee is known as the franchise agreement.

• The following are supplied by the franchiser to the franchisee

• Permit to use their  trade name

• Management training

• Support for marketing

• Finance   facilities

• Layout of the shop

• Goods and equipment

• Technology

The following should be done by the franchisee

• Agreement to act according to the terms and conditions of the franchiser

• Invest capital • Purchase of goods only from franchiser or the suppliers approved by the franchiser

• Payment of the royalty as agreed

Franchises can be classified as

• Product franchises

• Manufacturing franchises

• Business method franchises

 Several advantages of franchise businesses are given below
• Franchiser can expand the business without his own investment
• Franchisee gets a large market due to the goodwill of the franchiser
• Franchisee gets a chance to receive a large profit
• Franchisee receives management training from the franchiser
 Several disadvantages of franchise businesses are given below
• Franchisee does not enjoy complete independence since the franchiser’s control is there
• There is a risk with regard to the investment since it depends on the franchiser’s goodwill
• There is uncertainty of profits
• Purchase of franchise is costly.