It is known that one of the ways to develop (“promotion”) own business is to increase the sales market for its goods (services), by creating a network of own sellers in other territories. But creating your own chain of stores, hotels, cafes, etc. in another territory, maintaining a high level of service in it requires significant costs and energy on the part of the owner.
At the same time, it has long been noted that by selling the right to their business to other independent entrepreneurs, teaching them the practical skills of conducting such a profitable business, the owner can achieve a much greater result.
On the other hand, beginner businessmen are well aware that working under a “promoted” name or trademark is much more beneficial than spending huge funds to promote their own business and support its stability.
The way to solve the above problem is franchising.
As an example, you can name some large companies operating under the franchise system (McDonald’s, Coca-Cola, Pepsi, ZINGER, XEROX, etc.).
Although some well-known companies are already operating in the Ukrainian market in the franchise system, for many, this activity is a new and incomprehensible method of doing business. The reason is the lack of awareness of entrepreneurs about the possibilities and features of such a way of doing business, as well as the lack of clear legislative mechanisms governing this area of relations.
Under a franchise agreement, a franchisee (buyer) buys a franchise, i.e. permission (right) to engage in a certain period of time, in a certain territory, defined by a business, under the trademark or company name of the Franchiser (owner), using its technologies, commercial information, know-how, etc. The franchisor has the right to monitor the quality of the business of the Franchisee, and is obliged to provide him with all possible assistance (for example, in organizing the Franchisee enterprise, staff training, management, etc.)
Unlike the license agreement, where the Licensee acts on the market as a person other than the Licensor, franchisee franchisees in customer relations, working under the brand name or trademark of the Franchiser, is associated with the latter and acts as a representative of its products and / or services.
A franchise agreement does not require registration (as opposed to licensing agreements for industrial property).