The franchising advantage

01 February 2010

Franchising offers big benefits to brand owners considering international expansion. Mark Abell explains how to get it right

One-minute read

International franchising is in a good state of health and the economic downturn has done nothing to reduce enthusiasm for it, particularly in the retail, food and beverage and hotel/hospitality business. However, despite the fact that franchising is essentially the licensing of a bundle of IP rights, the reasons why businesses adopt this approach, the structures adopted and the franchise specific regulatory regimes that exist is some 26 different countries is relatively unfamiliar to the majority of IP lawyers. But understanding the advantages (and disadvantages) of the franchise model, how cross-border franchising arrangements should be structured and key regulatory controls governing the practice is essential for potential, franchisors, franchisees and their legal advisers.

There is no shortage of material available expounding the advantages of franchising a business. In academic circles two dominant theories explain the motivation for franchising: the so-called agency and resource scarcity theories.

Business benefits A...

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