Franchising

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Franchising represents a certain type of relationship between entities when one party (Franchisor) transfers to the other party (Franchisee) the right to a certain type of business using its trademark for a monetary reward. The use of a franchise is regulated by an agreement between the Franchisor and the Franchisee.

The most well-known examples of the use of franchising include the McDonald's chain, Burger King, and KFS. Only after signing an agreement to purchase a franchise and registering it with Rospatent (Federal Service for Intellectual Property) does the Franchisee receive the right to use the trademark and business model of the Franchisor’s company.

Franchising has its advantages and disadvantages.

Its main advantages include:

• integration into a large company, which can be the key to successful negotiations with banks when obtaining a loan for business development, since franchising can help reduce business risks;
• integration into the existing marketing and advertising system, which require a lot of money and time;
• quick access to markets;
• obtaining company support when choosing a site for providing services;
• use of a well-known and proven trademark and range of services;
• the possibility of timely acquisition of modern knowledge through the organization of regular professional training.

The main disadvantages include:

• dependence on a large company;
• difficulties in choosing a suitable franchisor;
• the impossibility of influencing the Franchisor's trade policy (the Franchisee is forced to comply with the rules and restrictions in business established by the Franchisor, even if they do not benefit the business);
• often strict rules are established for the Franchisor when leaving the business and a ban is stipulated on the opening of competing organizations for a certain period and in a certain territory;
• inability to influence the Franchisor's marketing or advertising (the Franchisee is forced to participate in the payment of centralized marketing and advertising campaigns).

In order to avoid mistakes, drawing up an agreement and registering a franchise with Rospatent requires the involvement of specialists. Erfis specialists can provide professional assistance in preparing the documents necessary for mutually beneficial cooperation on the basis of franchising.

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