Entrepreneurship

Franchising refers to the franchisors in a form of contract that allows franchisees to be compensation for the use of its name, trademarks, and proprietary technology, product and operation management, in other business activities and business models. (Siebert, 2004)
In the 80s, few German ale brewers authorized rights to some taverns, in order to promote their products. The license then spread out of the Europe, to the United States and even the whole world. That was the beginning of franchising that we are familiar nowadays. (Daszkowski, 2014) In 1851, Albert Singer, who is called ‘the father of franchising’, established the Singer Sewing Machine Company. (Seid, 2014) He spread his sewing machines lots of other place by using franchising. He is the first entrepreneur who was known as a franchisor. Also, Albert Singer was the first one to use franchise contracts. (Seod, 2014) Therefore, signing agreements has become a practice between franchisor and franchisee nowadays. The wide spread of franchising leads to market saturation. Consequently, the companies, which are lack of fund, are forced to go bankrupt and shut down. This has put many franchisees into trouble. In order to solve the above problem, the International Franchise Association (IFA) is formed so as to control the franchising industry. (G. Sharp, 2014) Under the regulation of the IFA, companies can now operate franchising under a safe situation and franchisees can be safeguarded as well.

Nowadays in the 21st century, there are two main types of franchises according to the International Franchise Association (IFA), which are product distribution and the business format. (Cate, 2014)
Product distribution franchise is just selling licensed products, and the relationships are the suppliers and dealers. In product distribution franchising, franchisor authorizes its franchisees with trademarks and logos, but usually does not provide them with the system of the whole business. (Coffey, 2013) Examples of...