A franchise is as simple as the
franchisor allowing interested parties to use the franchisor’s business concept and techniques in exchange for a percentage of the revenues earned by the franchisee and in some cases in exchange for royalties.
Franchising is more common in the service industries where emphasis is placed on delivery of quality. The franchisor is armed with experience having established market goodwill while the franchisee is armed with capital and is willing to take risk. Most restaurants and clinics are resorting to franchising as a way of expanding their business and reaching other markets.
Lengthy contracts
The potential for disputes in the franchise arrangement is quite high as it is established by a series of complex and lengthy contracts. The franchisor who is the business owner, faces the risk of dishonesty and negligence from the franchisee while the franchisee faces the risk of non-performance by the Franchisor.