Options For Franchising

Financial Post:

Once you have made the decision to either franchise your business, or acquire the rights to develop a franchised business, there are several franchising options available to you, the availability and advisability of which will depend on the nature of your franchise system, the territory within which you can conduct business and your overall business acumen. The following is a list of three examples:

Direct Franchising: Direct, or unit, franchising is the purest form of franchising a business. Under this model, the franchisor grants to the franchisee the right to open one franchised business at one location, with a specified geographic range that will be protected from other franchised businesses of the same system, for instance the right to open one fast-food restaurant at a particular address. Additional franchises may be granted based on the performance of the first location. In most cases, it will be rare for the franchisee under this model to be required to satisfy performance criteria or sales quotas.

Area Development: Under an area development agreement, the franchisor grants the franchisee (or, area developer) the exclusive right to open and operate several franchised businesses within a much broader geographic territory. Read more.

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