GRATA International is a dynamically developing international law firm which provides services for projects in the countries of the former Soviet Union and Eastern Europe. More than 28 years 250 professionals in 19 countries advise major international and local firms. GRATA is recognised by Chambers & Partners, Legal 500, IFLR1000, WWL, Asialaw Profiles.
GRATA is recognised by Chambers & Partners, Legal 500, IFLR1000, WWL, Asialaw Profiles.
There are several ways to start a business, including finding
and running a new business, buying an existing business, or buying
a franchise, etc. Nowadays, buying a franchise is the most commonly
used form. Under a franchise agreement, a franchisor undertakes to
grant to the franchisee a license established in accordance with
the procedure, for the use of its intangible assets such as the
firm's name, trademarks or service marks, industrial design,
packaging, as well as business management systems, planning,
communications, and principal guidelines on the procurement of
goods and services. While a franchisee undertakes to conduct its
activities in accordance with a system and cooperation program
developed by the franchisor, as well as to pay proper fees or
royalties. The franchise business allows the franchisee to operate
under the franchisor's trademark and to bring its business
model into the market in line with the franchisor's standard
and benchmark.
There are three types of franchise, depending on the branch:
Product franchise /selling
or distributing products manufactured by the franchisor using the
franchisor's trademark/;
Manufacturing franchise /
transferring the right to use the technology by providing raw
materials to the manufacturer and ultimate producer who own the
trade secrets of the production of the raw material and technology
registered in the Intellectual Property Office/;
Service franchise /granting
the right to the engage in certain types of activities along with
trademark to the franchisee/.
Advantages
Disadvantages
Bankruptcy risk is low.
The franchisee does not need to concern about marketing because
of the use of trademarks of products and services that are already
familiar to the market;
The franchisor provides the franchisee with a package of
business services such as training, support for starting the
business, methodology, and regular advice.
Previous work experience is not required as well as the
franchisor provides with necessary training.
Small businesses will be able to compete with large businesses
under the franchise program.
The franchisee has an exclusive right in its territory.
Financing the business is easier. For instance, banks are
likely to provide loans for buying reputable franchises.
The franchisee pays an advance payment, fixed management fee
and royalty to the franchisor.
The franchisee must buy goods only from the franchisor.
The business is restricted under a franchise agreement.
It is important to have high human resource standards, as other
franchisees may adversely affect your business reputation.
It is unable to sell the franchise without the consent of the
franchisor.
A certain percentage of all profits and sales are regularly
paid to the franchisor.
There is little opportunity to change or expand your business
due to market conditions.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
