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Franchise

A franchise is defined as an authority granted by a franchisor to a franchisee to produce, distribute, or sell goods or services, involving various fees. Unlike a service, a franchise is about granting rights to use business resources and intellectual property, which is subject to specific legal regulations. The franchise agreement establishes a relationship where the franchisee pays fees for the rights to operate under the franchisor's brand, with any provided services being secondary.

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7 views1 page

Franchise

A franchise is defined as an authority granted by a franchisor to a franchisee to produce, distribute, or sell goods or services, involving various fees. Unlike a service, a franchise is about granting rights to use business resources and intellectual property, which is subject to specific legal regulations. The franchise agreement establishes a relationship where the franchisee pays fees for the rights to operate under the franchisor's brand, with any provided services being secondary.

Uploaded by

saba adil haider
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Sindh Definition of a franchise

Means an authority given by a franchisor, including an associate of the franchiser, under which
the franchisee is contractually or otherwise granted any right to produce, manufacture,
distribute, sell or trade or otherwise deal in or do any other business activity in respect of goods
or to provide services or to undertake any process identified with the franchiser weather or not
against a consideration or fee, including technical fee, management fee, or royalty or such
other fee or charges, irrespective of the fact whether or not a trademark, service mark, trade
name, logo, brand name or any such representation or symbol, as the case may be, is involved.

Why is a franchise not a service but the granting of a right itself

1. A service typically involves a transaction where one party performs tasks or activities for
another in exchange for compensation (consulting, cleaning, and professional services)
but a franchise involves granting permission to use a set of business resources and
intellectual property, which is related more to licensing than providing a direct service.
The franchisee benefits from the established reputation and operational systems, which
are the core elements of the granted rights.
2. Franchises grant rights to use a brand name, business model, etc. This is different from
a service transaction where one party performs tasks for another. This also means
franchises are subject to different legal regulations/requirements instead of service
agreements. Specific laws governing franchise disclosure, registration, and termination
all have to be followed which highlights the significance of the rights granted over any
specific services provided.
3. The franchise agreement establishes an ongoing relationship where the franchisee
continues to operate under the franchisor’s brand, paying fees and royalties in exchange
for the granted rights. The fees (initial franchise fee, royalties) paid by the franchisee are
for the continued use of these rights rather than for services.
4. While the franchisor may provide services such as training and support, these are
secondary to the core granting of rights to operate the franchise. The primary focus
remains on the utilization of the franchisor's brand and business model to operate a
successful business.

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