Franchising is a commercial activity whereby the franchisor permits and requires the franchisee to conduct the purchase and sale of goods and provision of services on its own under prescribed conditions.
To make the most of franchising and limit risks, businesses need to pay attention to a number of issues:
With franchisors:
- The possibility of trademarks and trade names being harmed by their franchisees
- Risks of intellectual property rights
- Risks of information security, business secrets
With franchisees:
The franchisor’s business must accept the franchisor’s relatively tight control over a number of issues in business operations: production and business processes, product quality, import raw material import…
The risk to a franchisee can be enormous if the franchisor reserves the right to unilaterally terminate the contract and requires the franchisee to immediately terminate all business activities under the brand or business model. was previously franchised when the franchisee failed to meet certain conditions set forth by the franchisor.
Therefore, before officially signing a contract to become a franchisee, businesses also need to consider and research very carefully.
