Trade Name Franchise

Published by MBA Skool Team, Last Updated: January 22, 2018

What is Trade Name Franchise?

Trade Name Franchisee can be defined as an arrangement in which there is a supplier (franchisor) who supplies a product or product family to any dealer (franchisee) who could also avail the identity (brand name) of the supplier (franchisor). Trade Name Franchise is also known as product franchise. The exclusive branded stored that are present in the market are usually product franchises. The term franchising can also be defined as a method of distribution of services or products.


It involves at least two levels of people –

Franchisor – The entity which lends its trade name or trademark and a business system.

Franchisee – The entity which has to pay a royalty and quite often an initial fee to gain a right to operate business under the franchisor’s system and name.


Therefore, Franchising is a team effort. It is often said that - "Franchising essentially means working for yourself, but not by yourself." The success of any brand depends on the partnership between franchisee and franchisor. The success of franchiser depends on the proportion of franchisee operating profitably under him. The franchisee gains from the brand name which attracts customers and from the operating process which provides quality assurance and time efficiency. The franchisor’s brand equity increases by good performance of franchises and also receives monetary gains from the royalty/profit share received from franchisee. Let us consider some example –


McDonalds, Dominoz and KFC operates a huge number of stores worldwide under Trade Name Franchise Model.


 

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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