A franchise is a form of business that involves an existing business allowing third parties to operate under the same trade/brand name, with access to their sales, distribution, or manufacturing channels.
We are talking here about the franchisee and the franchisor. This method allows an entrepreneur to develop more quickly while taking less risk thanks to the training provided, the reputation of the brand, and the network of business already involved in the local market.
Convention Daniel Moquet
Franchising is based on three main concepts:
Signs of customer support
The franchisor must guarantee the franchisee the rights to use the following customer signs:
- The brand and the sign,
- The concept,
- The visual identity of the franchise.
It is the franchisor's responsibility to maintain and develop its brand image. The franchisee must comply with the regulations governing the use of the brand and customer rallying symbols, provided by the franchisor. The franchisor may carry out inspections to ensure that they are used correctly. At the end of the contract, the franchisor must ensure that the customer rallying symbols are no longer used by the former franchisee. In the event of territorial exclusivity in the contract, the franchisor must specify the terms.
This is the franchisor’s major asset, it is all the commercial patterns, software, management techniques, etc., tested and implemented by the franchisor within its network. The network shares notions that are secret (difficult to access by a person outside the network), substantial (representing a competitive advantage for the franchisee) and identified (written down in one or several operating manuals).
The franchisor passes on these notions to the franchisee through the initial training and monitors their correct implementation. In order to improve its expertise, the franchisor encourages feedback. For his/her part, the franchisee undertakes not to disclose the network's know-how, in particular to competing networks, so as not to damage the franchise network.
Technical and sales support
Technical and sales assistance is provided by the franchisor to the franchisee throughout the duration of the contract. More specifically, assistance is provided during the setting up of the project and during the opening of branches. This assistance represents a transfer of know-how between the franchisor and the franchisee, and also allows the franchisor to check the application of the concept.