Preface and Acknowledgments

The social and economic impact of franchising is enormous. Hamburger chains

seem to be the franchising example imprinted on many people’s minds, but the

concept has been applied to businesses across the economic spectrum. “One out

of every three dollars spent by Americans for goods and services is spent in a

franchised business. Homes are bought and sold through franchised real estate

companies. The same homes can be cleaned, painted, and carpeted through a

franchise. Cars can be purchased, tuned, and washed through franchises. We

have our hair cut, clothes cleaned, pets cared for—all in franchised business. We

can travel from one area of the world to another through franchised businesses.”1

In fact, franchised businesses have provided nearly 9 million jobs and generated

over $350 billion in payroll.2

At its core, “franchising is primarily a method of distribution of goods or

services.”3 Franchising involves a series of agreements between the franchisor

and franchisee that authorize the franchisee to operate a business using the

franchisor’s intellectual property and proprietary system. Franchisors license

trademarks and/or other intellectual property to franchisees and provide fran-

chisees with support by way of a franchise system to promote common system

standards. In exchange, franchisees agree to, among other things, pay the fran-

chisor a royalty and/or some other calculated consideration.

The franchise agreement, discussed at length in this book, is a legally binding

contract between a franchisor and franchisee, outlining the franchisor’s terms

and conditions for the franchisee. Typically, the franchise agreement will include

the following provisions: (1) an overview of the relationship and the obligations

of both the franchisor and the franchisee; (2) use of the intellectual property,

including trademarks and patents; (3) initial and continuing fees; (4) site selec-

tion and development; (5) initial and ongoing training and support; (6) duration

of the franchise agreement and the franchisee’s rights to enter into new agree-

ments; (7) advertising; (8) insurance requirements; and (9) record keeping and

the franchisor’s rights to inspect the books and records of the franchisee. Utiliz-

ing a franchised system can be extremely advantageous because the franchisee

immediately has the name recognition of the brand, a business model that has

1. Barbara Beshel and Sidney J. Feltenstein, An Introduction to Franchising,

IFA Educ. Found.

(2001).

2. IFA, Economic Impact of Franchised Businesses, Volume IV, E-1 (2017).

3. Briggs and Morgan, P.A., An Introduction to Franchising,

MInn. dEpArt. oF EMployMEnt And Econ. dEv.

(2008).

PreFACe And ACknowledgments

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