For your business to thrive, not only is it very essential for you to find the right business partners, you also need to find the perfect sales models for you and your business venture.
A license is a formal permission or authority to do something that otherwise would be forbidden, for example using a brand, patent-protected technology, software or a database. A franchise is a contract between a brand owner the franchisor and another party the franchisee to use a brand, but also to obtain products, services and support from the franchisor. While using the brand the franchisee is often obliged use the shop furnishing, signs and corporate style and to pay a part of his turnover or profit to the franchisor.
So this is substantially more than a distributorship. Once you get your sales partner active, it does not mean you let them do all the work.
The whole process would still involve ongoing communication and support. With sales agent, stay in regular contact. Get them excited about your products.
Help them to be a competitive player in the market. With distributors, be aware of how products fit with ranging policies. Train their sales team.
Help in promoting the products and stay on top of seasonal and dated stock. With Licensees, make sure legal documentation is sound. With Franchisees, use a franchise consultant to help develop the package. Spend enough time on training and on understanding your brand values.
It is very essential that one knows the partners they engage in business with and how their products go through the distribution process and through sales. Knowing the basics and terminologies in conducting business is key. Normally franchisees act as distributors: they mostly purchase goods from the franchisor, own them, and sell them to their customers. Agents, on the contrary work under their own name and do not take ownership.
This particular method is when the franchise will authorize a franchisee to conduct business according to a set of company rules. This allows the franchisee to focus on managing a storefront while using proven success strategies.
This franchising option is best for those who want to develop their business through oversight and management. Finally, a business-format franchise is known as a process or manufacture franchise.
Using this concept, the franchise gives the franchisee the critical information on how to successfully run the business. A franchisee gets the rights to trademarks, trade names, and business practices.
Additionally, under this concept, the franchisor is heavily involved in the business and provides guidelines as well as expectations that the franchisee must comply with. This franchising method is the oldest and most popular out of the three options.
An authorized dealer is essentially a retail distributor. While franchisees are bound by a set of corporate rules, dealers have more freedom when dealing with the design of their store and availability of products. In most cases, a dealer will have the logo and name of the parent company and offer the same products. The big difference is that dealers do not make the products their seal but instead help in the sale and distribution of these products. Additionally, dealers often enjoy the benefits of advertising from their parent companies and receive training from them as well.
Most entrepreneurs want to create a company from scratch. One party, the franchisor, grants another party, the franchisee, a right to distribute goods or services, under a marketing plan or marketing program. The arrangement includes a license to use a trademark or other identity associated with the franchisor. In exchange, the franchisee pays some form of fee. The offer and sale of franchises is highly regulated by both federal and state laws.
They are active, engaged members of national franchise organizations. The firm is large enough to aggressively represent you and your business, and small enough to provide the personalized, attentive service you need. Our franchise attorneys work with colleagues in employment law, tax law, trust and estate planning, commercial finance, real estate and family law. The franchise relationship can help guide you through the process of developing a franchise program, complying with the franchise laws, and evaluating a franchise that you may wish to buy.
Contact one of our Franchise Law Attorneys for a consultation. Skip to content. Close Button. Franchising vs.
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