Franchising is a business model pursuant to which a franchisor
grants to a franchisee a licence to employ the franchisor's
systems and methods of operations in the operation of a business
that is usually associated with the franchisor's trademarks.
The franchisor also provides its know-how and expertise, along with
continuous support, in return for a royalty fee.
Typical Franchise Structures
There are three typical franchise structures in Canada:
- Unit franchises
- Area development franchises
- Master franchises
In recent years, a new franchise structure has been developed by
our firm for the benefit of our clients whereby a franchisor
proposes to become an equity co-shareholder (50%-50%) in the
franchisee entity. This concept carries many advantages, namely:
(a) the total investment for a franchisee is much less, therefore
increasing the potential pool of good franchisee
operators/investors; (b) it permits the franchisor to benefit (50%)
from the profits
