Franchising is an innovative method of business, which involves using another company's business name and model for running an independent business. Local franchises are unique; because they allow the franchisee to use the business name as well as their proven techniques, like how to distribute their products, services and trademarks in the day to day operations of the franchise. Franchisees benefit from the training, advertising, and other support from the franchisor, which helps to facilitate the efficient and profitable day to day operations of the franchisee's business. Due to the nature of the franchisee/franchisor relationship, the more profitable the franchisee's business becomes, the more profit the franchisor gains from the relationship. Franchise agreements vary in the length of the terms, which can range from five to twenty years or more. Termination of Franchise agreements by either party can result in severe consequences. Local franchising has many advantages for the franchisor and the franchisee. The franchisor benefits from the ability to expand his business across nations and continents by selling franchises to qualified individuals. The franchisor has the advantage of using the capital provided by franchisees, to finance their expansion into new areas. Franchisors are relieved of the necessity to obtain new licenses and permits for their expansion using new franchises, because it is the obligation of the franchisees to obtain licenses and permits. Franchisors are relieved of the necessity to obtain additional liability insurance for their new franchises, because it is the obligation of the franchisees to obtain this insurance, pursuant to the disclosure manuals provided by the franchisor. Franchisors are free of any obligation to guarantee the success or failure of franchises, because the disclosure documents provided to franchisees explain the risks that are involved with purchasing a franchise, and offer no guarantees from the franchisors.
