General Information

Facts and figures

Franchising, retail and service chains have been constantly growing for many years. There are thousands of chains and several millions of franchised units worldwide. As the boom of franchise is a global trend, you can check the key figures thanks to several federations and institutions :

Franchising: Francine Lafontaine definition

Franchising is “a contractual arrangement between two independent firms, whereby the franchisee pays the franchisor for the right to sell the franchisor’s product and/or the right to use [the franchisor’s] trademark at a given place and for a certain period of time […]. [T]he relationship between franchisor and franchisees “includes not only the product, service, and trademark, but the entire business format itself – a marketing strategy and plan, operating manuals and standards, quality control, and continuing two-way communication”.

Source : Lafontaine F. (1992), Agency Theory And Franchising: Some Empirical Results, Rand Journal of Economics, 23, 2 , 263-283.

Franchising: a European definition

“Franchising is a system of marketing goods and/or services and/or technology, which is based upon a close and ongoing collaboration between legally and financially separate and independent undertakings, the Franchisor and its individual Franchisees, whereby the Franchisor grants its individual Franchisee the right, and imposes the obligation, to conduct a business in accordance with the Franchisor’s concept. The right entitles and compels the individual Franchisee; in exchange for a direct or indirect financial consideration, to use the Franchisor’s trade name, and/or trade mark and/or service mark, know-how, business and technical methods, procedural system, and other industrial and/or intellectual property rights, supported by continuing provision of commercial and technical assistance, within the framework and for the term of a written franchise agreement, concluded between parties for this purpose.”

Source: European Code of Ethics for Franchising

Franchising: a US definition

“A franchise operation is a contractual relationship between Franchisor and Franchisee in which the Franchisor offers or is obliged to maintain a continuing interest in the business of the Franchisee in such areas as know-how and training; wherein the Franchisee operates under a common trade name, format and/or procedure owned or controlled by the Franchisor and in which the Franchisee has or will have a substantial capital investment in his business from his own resources.”

Source: International Franchise Association