What is Franchising ?

Franchising is a special kind of formal contract by which an affiliate firm produces or markets the produce of a multinational firm after obtaining a licence from the firm. According to the Oxford Dictionary, "Franchising is an authorisation granted by a government or company to an individual or group enabling them to carry out specified commercial activities." According to Donald W.Hackett, franching is a form of licensing in which parent company(from chiser) grants another company (franchisee) the right to do business in a prescribed manner. The nature of right could be selling the franchisers product using its name, product and marketing new techniques or general business approach. One of the methods of franchising is to provide an important component or ingredient. Franchising is a way of entering into international market. The business relation between a automobile manufacturer and its dealer is an example of franchising.