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The Basic Set up of A fast food Franchise

In this business relationship, the franchisor (the person who gives the license), is the supplier of the intellectual property to the member franchisee. This is the second party who signs a contract and pays the license to distribute the franchisor’s products and services.

These intellectual properties are defined as the following: trademarks, trade dress, confidential information, a business format and an operating system.

In inking this agreement with the franchisee, the franchisor commits to train and assist the member franchisee, with the details of running the fast food franchise.

Most are centralized services and are the marketing, publicity, promotions and advertising aspects. Most franchisors will also run the marketing program which develops the image and customers of this fast food network. Some franchisors even handle the human resources aspect.

In addition, the franchisor develops the materials, conducts market research and public relations. The franchisor is also responsible for conducting product research and development services and shares this information with fast food franchisees.

Often the relationship doesn’t end here. For instance, the franchisor may be the landlord, leasing or subleasing the site. You will find business arrangements of this kind between mall operators and the franchisor, who is most times the more acceptable tenant.

Another component of this business relationship is that the franchisors could be the direct or indirect source of financing for their fast food franchisees. This funding may be provided through various means such as the franchisor giving limited guarantees and the franchisee provided inventory buy-back arrangements with third party lenders.

Franchising as a business is here to stay. Look at the figures. In the United States alone, there are than 2000 franchising companies and more than 500,000 franchisee and franchisor operated outlets. The fast food franchising industry employs more than 8,000,000 persons......

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