Different Types Of Franchising

Introduction
Franchising is an agreement between two parties, the franchisor and the franchisee. In the report below, we take a look at franchising in both Malaysia and United States. Below are the similar characteristics which are comparable in the two examples used. Firstly, franchising allows:
• A franchisee to market a service or product using the trademark of the franchisor’s business
• A franchisee to use the franchisor’s operating methods to market a service or product.
• A franchisor to collect fees from the franchisee for these rights.
• A franchisee to seek rights and support from the franchisor obliged to provide.
There are many various types of franchises, such as product distribution and business franchises. Product distribution

The franchise fee paid by the franchisee will cover expenses such as rent and fixtures. The source of cash eliminates or reduces financial leveraging. Franchising avoids employee related issues, where in a company-operated store, a company payroll is used. In a franchised unit, they will be employed by the franchisee. It relieves the franchisor’s from having to worry about problems such as compensation and insurance for workers. Franchising also accelerates expansion. Franchisors are free to expand geographically at a rate where issues of employees, money and managers is not a problem. With modern technology, international expansion becomes more feasible.
The disadvantages of franchising are that profits have to be shared. A store needs sufficient volume for profits to be earned over a period of time. There would also be a loss of control. The franchisor will no longer have absolute control of how stores are operated. Instead, the franchisors will have to manage with a franchisee who agrees to operate the store, following training and given instructions of franchisor. Franchisors are also regulated by both federal and state laws of the

Before the enactment of the Franchise Act 1998, franchising in Malaysia was governed by contractual principles and without guidelines, it allowed parties to freely negotiate terms of franchising contract. With the Franchise Act, the franchising industry is regulated and there is a systematic scheme for franchisee, franchisor, and franchise brokers implemented. The Franchise Act brings about greater protection for local businesses, especially small and medium sized