Business Model – Franchise

Franchising refers to giving the right of a firm’s brand and business practices to other companies for a prescribed period of time, in exchange for a monetary return. The firm giving the right is called the Franchisor and the one receiving it is called the Franchisee.

RATIONALE

Franchisors is a growth model through which firms need not invest time and money in setting up and replicating their business models in different geographies. They simply need to identify potential companies to franchise to. They pass on the brand and other business practices and need to ensure that these are upheld over time by the Franchisees.

STARTUP EXAMPLE

McDonald’sCorporation – The most successful restaurant chain in the world today which has used Franchising to expand across the world. The firm passes on it’s business practices and ensures that Franchisees uphold them through audits. Today it is spread in 118 countries and has over 35,000 restaurants being run under the brand.