The most common type of franchise in the U.S. is a business format franchise. Simply put it is the type of structure where the franchisor provides for the franchisee a complete plan (format) for the management and operation of the franchised business. The plan spells out completely in a step by step format the how the franchise works and the task involved in successful management of the business. It delineates how they are to be done, when they are to be accomplished and by whom in order for the franchisee to be successful. The plan tries to anticipate and account for most management problems or issues. The system provides answers to a majority of issues that could come up along with potential solutions.
Major advantages of business format franchises?
- The system has been developed
- The systems has been tested and refined
- The system has been proven to work
- The franchisee has use of the trademark
- The franchisee has access to the combined experience of the franchisor and other franchisees thereby increasing the likelihood of success
- As more franchisees expand into more territories there is even greater name recognition
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