Franchising is a business system in which a company( or franchisor)
sells an individual ( or franchisee) the right to operate a business
using the franchisor's establlished system.
As part of the franchise system the franchisee pays an initial sum of
money ' a franchise fee or fornt end fee, to the franchisor and agrees
to pay a royalty ot management service fee for continuing advce and
assistance, which is usually caculated as a percentage of annual
turnover, the franchisee may also pay an advertising fee to contribute
to the franchisor's annual advertising and marketing costs. the
franchisee also has to the necessary capital to open the business.
The franchisor provides an operational manual which contains all the
information that the franchisee needs to run his or her business, A
franchisor may appoint a master franchisee to supervisr the business
on the particular area.
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