英语论文网

Hill & Jones (2008, p.15), identifies some of these risks faced by entrepreneurs (franchisees) in adopting franchising. The royalty must be paid even if a loss is incurred which is often a percentage of the gross sales. The franchisor has the power to withdraw/cancelled the agreement if some provisions are not met. Oversaturation could occur if too many franchisees are located in one geographical region. Due to overzealous selling by some franchisors, franchisees potential income required managerial ability, and investment may be incorrectly stated. The franchisees may be locked into contracts requiring purchases from the franchisors or certain vendors, For example this is the case with most McDonald's franchisees worldwide.

HSBC (2009, p.3), also identified some possible risks faced by franchisees including, devaluation of trade name, for example a widespread outbreak of food poisoning is traced back to one of the outlets of a well known franchise, if this gains media attention, the particular outlet and all other franchises may suffer accordingly, failure of the franchisor may mean failure to the whole franchisees under the franchisor, this could create a major problem for the whole business, lack of Independence, and so on. On the other hand, some of the risks that may be incurred by franchisor includes careful examination and assessment of the potential franchisees, costs risks, proper monitoring and control the franchisees, not delivering sufficient support, business conflicts, selection of franchisees for wrong reasons and so on, whereby most of the risks are not prominent as compared to that of the franchisees.

The Franchise Agreement

Beshel (2001), p.1 describes franchising as the agreement or license between two legally independent parties which gives:

A person or group of people (franchisee) the right to market a product or service using the trade mark or trade name of another business (franchisor).

The franchisee the right to market a product or services using the operating methods of the franchisor.

The franchisor the obligation to provide rights and support to franchisees.

A franchise agreement is a contract between two (legal) firms, the franchisor and the franchisee. (Rubin, 1978 p.224 in Stanworth &Hoy, 2003, p.22). It is the legal written documents that governs the relationship and specifies the terms of the franchise purchase and the agreement also enjoys a 'cooling off' period.

A good relationship between both parties is identified as been critical for the success of the whole system as identified by Beshel (2001, p.7), that since franchising establishes a business relationship for years, the foundation must be carefully built by having clear understanding of the whole franchising system. Therefore there has to be a strong agreement between both parties.

Beshel (2001, p.3), identified two types of the agreement. The single unit and the multi-unit franchise agreement. She explains further, two ways in which the multi-unit franchise agreement can be本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。