Managing a Franchise System - David Hung-Ta Tsai - Bog

What is a franchise? According to the Merriam-Webster dictionary, the word franchise comes from the French word "franche." The first known use of the word franchise was during 14th -century medieval times. Historically, a franchise was a right granted by a sovereign authority (Blair and Lafontaine, 2005). A sovereign authority granted an individual or group of people significant market power over a particular activity in a designated location for a certain period of time (Blair and Lafontaine, 2005). A payment, the "royalty" to the sovereign authority, was required for this privilege, usually in the form of a share of the produced goods or earnings (Blair and Lafontaine, 2005). Today, the basic principles of franchising remain largely the same. Franchising is employed as a critical strategy for the growth of global commercial activity by many for-profit organizations; these organizations give rights or licenses to an individual or firm to market its goods or services to a particular territory or market. Franchise networks offer entrepreneurs the opportunity to join together in a spirit of collaboration, as well as providing hope for them in achieving their aspirations and financial goals. This particular strategy has led to considerable growth for the franchising industry and represents a wideranging spectrum of business concepts and market segments.