WHAT IS FRANCHISING
Franchising (or commercial affiliation) is a form of continuous collaboration for the distribution of goods and services between an entrepreneur (Franchisor) and one or more entrepreneurs (Affiliates or Franchisees), legally and economically independent from each other, who stipulate a specific contract by means of which:
The Franchisor grants the Affiliate use of his own commercial formula, including the right to exploit his know-how (together with the necessary techniques and knowledge) and his own emblems, together with other services and forms of assistance in order to enable the Affiliate to manage his business with the same image as the Franchisor Company.
The Affiliate pledges to use the commercial policy and image of the Franchisor in the reciprocal interest of the parties and the consumer in addition to respecting the conditions of the contract freely stipulated.
Franchising is divided into three different types:
Distribution Franchising: Franchising presupposes that the Franchisor has perfected and experimented techniques and commercial methods constituting the know-how that he will transfer to the Affliliate. As regards the use of the labels, services rendered and goods supplied the Franchisor asks the Affiliate for an equivalent in the form of right of income and /or royalties.
Services Franchising: This is a system in which the Affiliate sells no product but offers services devised, perfected and experimented by the Franchisor. The operational field of this system is very varied, ranging from restaurants (including cafes and ice cream shops) to tourism and free time activities (hotels, holiday villages, travel agencies, camp sites, sports centers etc), from printing to beauty institutes and hairdressers, from professional consultancy services to educational and training institutes, from real estate to car hire etc.
Industrial Franchising: In this system the Franchisor and Affiliate partners are two industrial Companies. The former grants the latter the license of patents, manufacture and trademarks, gives his technology and guarantees constant technical assistance. The latter, the Affiliate, makes and commercializes the goods produced by his factory by applying the know-how and sales techniques of the Franchisor.