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Question
Enumerate the characteristics of franchising.
Solution
- A franchise relationship is based on an agreement that lays down the terms and conditions of this relationship.
- The term of the franchise may be for 5 years or more. The franchise agreement may be renewed with the mutual consent of the parties.
- The franchisee gives an undertaking not to carry any other competing business during the term of the franchise, and the franchiser gives an undertaking not to terminate the franchise agreement before its expiry except under situations that may justify the termination of the franchise agreement.
- The franchisee agrees to pay specified royalty to the franchiser, as per the terms of the franchise agreement.
- Franchise means selling the same product and maintaining a similar type of shop decor (i.e. style of interior decoration) for which the franchiser provides assistance to the franchisee in organizing, merchandising, and management.
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