Many businesses grow by offering franchise opportunities and many people are able to start in business by taking on a franchise. Franchising a business involves granting a licence to trade using its brand name and business model to another business (the franchisee).
The franchisee pays an initial licence fee and a recurrent royalty or service fee and is responsible for financing and managing the franchised outlet. The franchisor plays a continuing role in supporting the franchisee but, in the right situation, can benefit from cost-effective expansion. Several of the world’s biggest brands have built their business using a franchise model, including 7-Eleven, Subway, McDonalds and Burger King. Franchises in India include InXpress, RollaCosta, Gelato Vinto and Gayatri Electric Vehicle. Vietnam is a hotspot for franchising with local franchises including Wrap and Roll, Trung Nguyen and Maxx. Cambodia has a successful franchise, Brown Coffee.
A franchise agreement is just like any other contract – it sets out the rights and obligations of each party and provides appropriate remedies if either party fails in their obligations.