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Is granting a franchise the same as granting a licence to trade under another company’s name?
Partly. A big part of franchising is the franchisor’s brand and franchisors do, or should, work very hard at ensuring their brand is well recognised in the market place in which they operate - that is what franchisees are paying for. Secondly, franchisors like to create a common image so that customers do not know whether they are dealing with the franchisor or franchisees. While lawyers may not like this because it blurs the lines between who is liable to customers, the marketing men love it. From a franchisor’s perspective, if you are allowing somebody to use your brand and hold themselves out to the outside world that they are the franchisee, then clearly a simple licence to use the franchisor’s trade name is not enough. Franchisors regulate to a very high degree every aspect of the franchisee’s business so as to ensure the reputation of the franchisor is maintained and franchisees do not do anything that could have a negative effect either on the franchisor’s reputation or the reputation of other franchisees. As a result franchise agreements, when linked to the provisions of the operations manual, are much more complex than a simple licence agreement.
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