The Word is franchising is used in a variety of ways that we here everyday, but what is Franchising?  Franchising originally came from the French words meaning honesty and freedom.  Franchising is a type of way to do business between to companies.  One party who can be coined as the franchisor creates a variety of ways of how to do business with the second party, who can be called a franchisee.  These methods of business can be categorized as physically existing or intangible such as advertising, training and training material among other various franchise services.  Franchisors normally charge a fee and demand a percentage of the profits that the franchisee makes.  Franchisors will have to keep track of an audit book which will later be inspected knowingly or not by the franchisee to make sure that operations are on plan, legal and are doing exactly what the franchisee anticipated.  

There are also various types of Franchising.  Franchising does not only refer to services between two parties.  For instance, a franchisee can ask for assistance from a franchisor if he needs a particular product and trademark.  The Franchisor offers these plus his royalty fee but there is no plan of business between the two parties. This would occur in the event of vending machine operators and those companies that rent the vending machine.  This type of franchising is known as trade name franchising or as product franchising.  

The two parties normally enter into a contract where a franchise agreement is decided upon.  This franchise agreement will lay out the areas where the franchisee will have control over the business, the duties of the franchisor and under which circumstances the franchises will be protected by, by the franchisor and the franchisor and franchisees obligations to one another.  

Franchisors definitely end up gaining more than the franchisee simply due to the fact that the franchisor will be paid his or her royalties despite whether or not the franchisee is making a profit from the franchisor’s efforts.   Franchisors also do not endure the same risks as the franchisees do.  If the franchise agreement is terminated or cancelled before the completion date, this means that the franchisee will lose out on all of their investments which include the brand name leased and the business scheme offered by the franchisor.

Franchising can has various forms of franchising such as the previously mentioned trade name franchising and product franchising as well as social franchising, franchise consulting and event franchising.