What is a franchise?
According to the Franchising Code of Conduct, a business is deemed to be a franchise where: There is a written, oral or implied agreement; One party (the franchisee) is granted the right to carry on a business of offering, supplying or distributing goods or services under a system or marketing plan; The system or marketing plan is substantially determined, controlled or suggested by the other party (the franchisor); The operation of the business will be substantially or materially associated with the franchisor’s trademark, advertising or commercial symbol; and Before starting or continuing the business the franchisee must pay or agree to pay the franchisor an amount, whether an initial fee, ongoing royalty or other payment.
Generally a franchise is a contractual agreement between a person or entity and an established business for the use of the name, structure, reputation, management policies and expertise of the business for a specified period of time. The Arizona Department of Commerce, Small Business Services, has information on franchises in their online Step-by-Step Checklist to Start, Expand or Operate a Small Business in Arizona. Visit their web site at www.azcommerce.com/smallbiz.
