FranchiseSysteme

FranchiseSysteme (franchise systems) describe a business model in which a franchisor licenses its brand, business format, and operating system to franchisees in exchange for fees and royalties. The franchisor provides a proven concept, training, ongoing support, and access to a brand-wide supply chain, while franchisees operate individual units under the system. The core elements include the brand, standardized operating procedures, marketing, training, quality control, and a franchise agreement that governs rights, obligations, fees, and duration.

There are two main forms: business format franchising, where franchisees replicate the entire business model, and product distribution or trade-name franchising, where the focus is on selling branded products. Franchise systems rely on territorial rights, performance standards, and a centralized governance structure to ensure consistency across locations.

Economically, franchise systems enable rapid geographic expansion with relatively lower capital expenditure for the franchisor and ongoing revenue streams for franchisees through royalties. Costs for franchisees typically include an initial franchise fee, ongoing royalties, and contributions to a marketing fund; returns vary by concept and location.

Challenges include ensuring consistent quality, dependence on franchisor support, potential conflicts over fees or terminations, and market saturation. Legal frameworks typically require a franchise agreement and disclosure documents; specifics vary by country.

Examples of well-known franchise systems include McDonald’s, Subway, and 7-Eleven, which operate thousands of franchised locations worldwide.