FRANCHISING IN GREECE
By: Themistoklis Kossidas,
Auditor, Hellenic Capital Market Commission,
Kolokotroni 1 & Stadiou str., 105 62, Athens, Greece.
tkossidas@yahoo.com
Abstract
The paper is dealing with the franchising method in the Greek market, given the dynamic
growth of the method during the last years that resulted in the small and medium sized
enterprises to use it as a way of growth.
Franchising is one of the two options for someone to start up an enterprise. Following the
approach of our era that is based on knowledge, innovation, investment in new technologies,
this method, supported by these characteristics, has been developed and established as one of
the safest methods of enterprising growth.
The paper presents the managerial aspects of franchising, such as: a) the basic characteristics
of franchising and how it functions in the Greek market, b) the steps for creating a successful
master franchise, c) the parameters that a franchisee should take into consideration in order to
minimize the risk and create a successful venture and d) the elements of know-how in
franchising.
The financial impact of franchising is being analyzed for the franchisor and the franchisee.
The financial information for listed companies in the Athens stock exchange, that use
franchising as a way to increase their business, it is also presented and commented.
We also compare the present situation in Greece with the abroad, as well as the possible gains
for the enterprises and the national economy, and the opportunities and future trends our
country faces. The results of the three based-researches for franchising, made by ICAP,
Logistika and Franchise Success-Panorama 2006, are summarized and analyzed.
1. Introduction
In a business context, the terms “franchise” and “franchising” are often used
interchangeably to mean a business, a type of business or an industry. Generally
speaking, franchise is an agreement or license between two parties which gives a
person or group of people (the franchisee) the rights tο market a product or service
using the trademark of another business (the franchisor). The franchisee has the rights
tο market the product or serνice using the operating methods of the franchisor. The
franchisee has the obligation tο pay the franchisor certain fees and royalties in
exchange for these rights. The franchisor has the obligation tο provide these rights and
generally support the franchisee. Ιn this sense, franchising is neither a business nor an
industry, but it is a method used by businesses for the marketing and distribution of
their products or serνices.
- History of franchising
Franchising started in the United States as early as in the 18th century but the great
expansion was in 1970s. In Greece, it appeared in mid-1970s but the real development
started after 1997. During the 1990s, many small to medium sized businesses faced
survival problems due to the market changes and the severe competition. Thus,
franchising became the basic development tool for the small to medium sized
businesses and it gets the credit for their revitalization and consistent growth.
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Modern business format franchise really took-ff in Greece. There were many
causes for the rapid adoption and use of franchising by many entrepreneurs and by
many businesses, such as:
 The recognition of franchising as one of the safest way for business
development since the percentage of businesses that shut-down during the first
5 years of their life is 1%-2%, while a 50%-60% of independent stores shutdown during the first 5 years of their life.
 The possibility to own a recognized brand-name that does not need a big
capital investment, it is an opportunity for young ambitious entrepreneurs and
experienced middle level employees.
 The rise of mass marketing and the increasing mobility of the people fueled
the growth of franchise businesses.
 The consumer desire for convenience and consistency.
 The shift in the Greek economy from production of goods to the providing of
services, in particular services that fill the needs of life-styles.
Despite the late adoption of franchising in Greece, there are big steps forward thus
the current situation is in a good track, as it is shown by the following figures. In
2001, there were approximately 230 franchisors and 4000 businesses whereas in
2005, there were 400 franchisors and 6000 businesses. For 2006, it is expected a
bigger increase to franchise businesses compared to company-owned stores that will
take place.
- Social impact of franchising
The pervasiveness of the franchise system has resulted in much discussion of its
socio-economic impact on society. The overall consequences are positive, thus, it:
 Creates new small to medium businesses and heightened competition in the
economy.
 Restricts the tax frauds, since franchisees have to keep proper accounting
entries to calculate royalty fees.
 Decreases the economic concentration in the economy.
 Increases the employment.
 Increases the life expectancy of the businesses.
The negative consequences, associated with franchising, are in the area of
franchisor/franchisee relations and possible conflicts that might arise.
2. Managerial aspects
- The basic characteristics of franchising and how it functions in the Greek
market
A franchising agreement involves two parties, the franchisor and the franchisee.
On one hand, the franchisor owns the trademark, provides support (i.e. training,
advertising, marketing, financing) and receives fees. On the other hand, the franchisee
licenses the trademark, runs the business with the franchisor’s support and pays fees.
The typical franchisor will have establishments that are operated by franchisees as
well as establishments that are operated by corporate employees. There are many
types of franchise arrangements, the two generic are:
 Product distribution franchises sell the franchisor's products and are supplierdealer relationships. Ιn general, the franchisor licenses the use of its trademark
tο the franchisee but may not in all cases provide the franchisee with a system
for running its business. Examples of product distribution franchises are soft
drink distributors, automobile dealerships, and gas stations.
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
Business format franchises not only sell the franchisor's product or serνice,
with the franchisor's trademark, but operate the business according to a system
provided by the franchisor. The franchisor provides training, marketing
materials, and an operations manual to the franchisee. There are many
examples of business format franchises, such as quick serνice restaurants,
automotive services, lodging, real estate agents, convenience stores, and tax
preparation services.
It might be helpful in understanding how business format franchising works to
examine the role of both the franchisor and the franchisee for a typical franchised fast
food restaurant (it is a highly franchised industry).
Thus, the franchisor gives general guidelines for the site selection, provides
prototype design (similar to other restaurants), makes generalized recommendations
for the employees, sets the menu, recommends the pricing policy, provides
advertising, sets quality standards, trains and inspects franchisees and offers bulk
purchasing program.
The franchisee chooses the site with the necessary approval, implements the
restaurant design, runs the human resources department, might change the menu upon
approval, decides the actual prices, carries out the quality control system and complies
with the program.
- Advantages and disadvantages of franchising
In general, the advantages of franchising are:
 Lower cost of establishment - the cost to acquire a well-know brand-name is
considerably lower than to set-up a business and try to dominate the market.
 Less exposure to risk - the experience and know-how of the franchisor reduces
the risks.
 Increase motivation – the franchisee as an independent businessman is more
motivated than a salary employee because of profit incentives and growth
opportunities.
 Some control of operations – the franchisor keeps some control over the
undertaking, whereas the franchisee can develop, to a certain degree, its
entrepreneurial skills.
 Economies of scale – franchising contributes to economies of scale due to the
size of expenses i.e. the expenses are divided to all members of the network.
 Knowledge of the local market – the knowledge of the local market is a
competitive advantage for the franchisee that is used by the franchisor for the
business expansion.
 Source of capital – the franchisor, through fee and royalty arrangement,
receives capital from the franchisee for channel developments and thus has
lower capital requirements than the wholly owned chain.
The disadvantages of franchising are:
 Profit participation – there is a franchising fee to be paid.
 Some control of operations – this point is also a disadvantage because the
franchisor does not exercise full control over the undertaking and the
franchisee can not act freely.
 Possible disagreements and conflicts – the franchising relationship involves
two independent parties bound together by contract. The possibility for
disagreement or conflict is much greater than among wholly owned chains.
- The steps for creating a successful master franchise
Historically, franchisors first complete their development at a national level
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before they decide to look for international investors. However, in today's global
economy, there is no longer a need to stall international expansion. Each concept can
be considered as ready to penetrate new markets, if it has developed a stable national
base with strong financials, it is governed by a strong and completely devoted team
and it has the necessary facilities to train and support international investors. Most
candidates, who are serious about acquiring and operating a master franchise, have
healthy balance sheets, thus an analytical report of the finances should be prepared.
Also, the franchisors, should be prepared to give details regarding all the existing
franchisees, who will give reference regarding the company.
The franchisor’s aim during the first 12-18 months is to find and establish a
master franchise in the primary target-market. The decision to expand the business
abroad must be taken beforehand and a strategy plan to be drawn for the expansion.
Many franchisors make the mistake of responding to an "opportunity" for
development in unknown markets.
The franchisor should come in contact with experienced franchise advisors and
entrust them with the conduct of a pre-entry study, aimed at defining the basic sectors
that must be looked into before deciding to expand the business internationally. Such
a study is extremely important as it will give useful information for the target-markets
and will allow to better negotiate with candidate franchisees. This study will give
indications on the i) needed time and budget, ii) legal direction for the entrance in the
new market and iii) direct competition, regarding the product, or service, or other
franchisors.
Before the assignment of the legal franchise rights in any other country, the
franchisor must ensure the copyright of the brand and the trade marks and must not
allow a master franchisee to secure the copyright, because then control might be lost.
All the elements of the system, the training program for franchisees and the support
package offered, must be reorganized so that it suits the needs of each new market.
When the necessary study has been completed, the franchisor should prepare an
advertising and promotional campaign for the selected market to attract suitable
candidates, who could buy and operate a master franchise.
Searching candidates must be thorough and before the final choice of a master
franchisee a collection and a verification of all the candidate's data (i.e. precise
identity, residence and other business activities) is required.
The franchisor must cooperate with the franchisee in order to create the regional
business development plan. The master franchise deal must include reference to the
minimum demands the franchisor has from the master franchisee of each country.
- The basic parameters that a franchisee should take into consideration in order
to minimize the risk and create a successful venture
The best way, for a franchisee, to minimize any possible risk, it is to be aware of
the risks and to have prepared an alternative plan. The following parameters should be
born in mind at an early stage, much before the kick-off of the venture in order to
have enough time to think of possible benchmark treatments.
 Assess the available capital – assure that the available capital covers the
franchise expenses. Rely on financing up to 40% of the total investment.
 Carry-out a market research – read, search and learn anything that has to do
with the concept. The viability and the duration of the concept should be prime
selection criteria, not the market trend. The prospective franchisee should talk
with established franchisees to benefit from their experience.
 Visit exhibitions – the franchisee has to collect all available information i) for
the franchisor and ii) the attractiveness of the concept to others. A well
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organized franchisor that supports its network by providing any requested
information, by educating the employees and by helping-out during difficulties
should be highly appreciated.
 Verify your suitability as franchisee – a successful franchisee has to have
certain characteristics that might differ depending the franchise. Build on the
strengths and try to improve the weaknesses.
 Valuate the brand-name – try to estimate the fair value for the concept.
Franchisors tend to over-estimate the brand-name.
 Check the franchise agreement – franchise agreement is a contract and every
word has to be understood and explained so that there will not be
misunderstandings and confusions.
- Know-how in franchising
The distribution system is where the know-how holds an important position and
franchise is not only a distribution system. So, one of the basic elements of franchise
is the know-how. In particular, there can be no franchise without know-how. Thus,
the definition of know-how in franchising includes the following:
Confidential - the best way to define the confidential character of know-how is the
following; know-how is confidential as it is not directly accessible to a franchisee, in
other words the franchisee will have to go through the franchisor in order to obtain
this know-how.
Original - the term refers mainly to the fact that know-how is not known in a
particular business.
Substantial - the know-how must consist of information and facts that are important
enough as to give franchisees a competitive advantage. Moreover, if a franchisee does
not have access to this information, it would be hard to succeed in business as fast and
as well as desired.
Tested - the franchisor must have already tried this know-how in as many areas as
possible (or at least in one area) and for as long as possible. This is the significance of
the so-called "test areas". The legal form of these areas (branch office, subsidiary, etc)
is of no importance. It is also obvious that these tests must be successful.
Defined - given the complexity of know-how, it is best, and logical, for it to be
written on a manual. Of course, manuals should not be handed over before signing a
contract. However, some elements of this know-how can be passed on even before
signing the contract. For example, definitions of a certain geographical area, its
characteristics and the criteria for choosing this area can be disclosed.
Sophisticated - it is clear that an outdated know-how has absolutely no value. In order
to avoid downgrading it, the franchisor must constantly update his know-how. This
tactic will ensure that the franchisor's system will not be copied or counterfeited by
his competitors and that the franchisees will continue to be part of the system, since
this system is truly effective. This is one of the main reasons why franchisees
continue to pay legal rights, without complaint.
Communicable – in order for this know-how to be commuted to franchisees,
franchisors must create and maintain ways of transferring it. This transfer may be
initially training and handing the manual, but it can also be continuous, by organizing
educational programs and updating the manual. In terms of time, these stages of
transferring know-how coincide with the signing of franchise contracts for the initial
transfer, and during the period this contract is valid, for the continuous transfer of
know-how.
In conclusion, know-how is not real and has nο value for a franchise, if it does not
allow franchisees of the system to reproduce the franchisor's success.
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3. Financial aspects
The selection of a distribution channel is usually considered to be a marketing
decision, but the factors influencing the decision of which marketing channel to use
include financial consideration. Indeed, the decision to franchise is often based
heavily on financial than marketing considerations.
As mentioned earlier, an important reason for franchising is the lack of capital to
build a wholly owned system and much of the expansion effort of franchising systems
is financed by the franchisees.
- Financial impact of franchising for the franchisor and the franchisee
There are some financial factors that the prospective franchisor should take into
consideration during the development of a franchise system. These factors can be
categorized in three main stages named, the initial, the pilot and the development.
The initial stage includes possible sources of revenue for the franchisor such as
initial franchise fee, on-going fee, supplementary revenue. The initial franchise fee
should include the design and development cost of the concept. The cost should be
allocated proportionally to all possible franchisees for a period that depends on the
initial life expectancy of the concept. The on-going fee (or royalty fee) is a percentage
of sales made by the franchisee paid to the franchisor. The supplementary revenue is
the revenue that derives from extraordinary activities such as lease or rental of
equipments i.e. activities outside the contract agreement but provided to the
franchisee upon request.
It is extremely important to have a true and fair evaluation of the charged fees so
that both the franchisor and the franchisee will have mutual benefits from their
cooperation. The franchisor should cover the franchise expenses from the received
fees whereas the franchisee should be able to pay the fees and all other expenses and
still have a reasonable profit. Generally, the financial plan of a concept is based on
estimations and appraisals. Prudence should govern these financial plans so that risks
will be minimized.
The pilot stage is where the franchisor has to prove that the franchising concept is
a worthy investment and it will create profits and goodwill for all. In general, the
main goal of a franchisor is to develop a concrete, trustworthy, efficient and effective
concept. At this stage, the franchisor has to advocate for the concept, to present the
benefits and to persuade using financial terms and concrete arguments.
The development stage is where the actual implementation takes place. At this
stage, the financial part (initial stage) and the viability (pilot stage) of the concept
have been accepted.
- The way forward for franchising in the economic context of Greece
In the Greek market, where franchising is in a good track, the challenge is to
expand existing businesses, difficulty which lies also in finding the right new
franchisees. In this context, restructuring and consolidation of enterprise value are
necessary.
For the franchisor, the objective is:
 To consolidate the strength of the existing network, which means focusing on
the quality of the relationship between the franchisor and each of its
franchisees, and of consolidating the ties between franchisees. Franchisees
need to feel reassured and to have the fullest support of their franchisor.
 To consolidate all of the assets of the franchise package which means the
service package offered to the franchisee, whilst never forgetting the service
the franchise offers to the end-consumer so as to consolidate consumer loyalty.
For the franchisee, the objective is:
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

To control their costs so as to keep competitive prices to the end-user.
To feed the franchise system in a bottom-up fashion with the best possible
feedback.
 To satisfy the customers and increase sales.
 To integrate the information which will be fed back to the network, so each
franchisee can learn and grow from this rich ground experience.
First and foremost, a successful franchise system is one in which each party’s
profitability serves the profitability and benefits of the system as a whole. This is the
real challenge in franchising since each franchisee is an independent entrepreneur
who is part of an economic entity, the network, which needs to be profitable as a
whole.
The way towards establishing a win-win situation between franchisor and
franchisee is to build economic assets together within the franchise network, founded
on the building up the business value for each party to the franchise relationship. This
is sound, true and ethical franchising.
- Financial information for the listed companies in the Athens stock exchange
A primary research of listed companies annual bulletin, for the year ended 2004,
was carried out in order to evaluate the impact of franchising in their financial
information. The results show that 11 listed companies out of 369 are engaged in
franchising. Although, the provided information is not adequate to summarize the
findings since little to no numerical information is given by each company, a
primitive categorization, based on the industry they operate, for the listed companies
that use franchising, follows:
 Four of them (Everest, Goody’s, Gregory, Katselis) are in the fast food
restaurants industry. Goody’s was the first company in Greece that used
franchising. It has 41 out of 183 fast food restaurants under a franchisee
agreement and they contribute 3,1% to the total sales. Other revenues are also
received, for example, for employees training. Every Everest fast food
restaurant has a franchise agreement with Everest holding company, thus, all
the revenue comes from franchise royalties. Katselis has a 0,4% sales to
franchisee. Gregory has 60 out of 217 fast food restaurants under a franchisee
agreement. The sales to franchisees were 9,7% and there is a service fee for
employees training program.
 Two of them (Atlantic, Alfa-Beta) are in the super market industry. Atlantic
has the biggest franchise network in Greece, it has 350 franchisee shops
whereas Alfa-Beta has 6 franchisee shops.
 Two of them (Vardas, Fashion Box) are in the clothes industry. Vardas has 3
franchisee shops and Fashion Box has 10.
 Three of them (Germanos, Motodynamic, Moda Bagno) are in the retail
industry. For this group no numerical information is provided, it is just
mentioned that franchising is used for expansion.
4. Trends
Several significant trends are identifiable in the field of franchising. Indeed,
franchising is a dynamic and evolving business format which has not yet been totally
defined in either legal, trade or academic terms. A perusal of major trends, hurdles
and opportunities facing the franchising industry are discussed.
- Present and future trends of franchising
In the 21st century the speed of change is awesome and accelerating. This is true
for the world of international franchising. Unfortunately with increasing
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internationalisation comes increasing regulation. Ιn Europe we have grown
accustomed to franchise regulations. Ιn 1988, the European Commission published its
"block exemption" regulation for franchise agreements and at a national level Greece
is contemplating the introduction of franchise legislation. Recent research has
suggested that there are now approximately 40 countries worldwide which either have
or are actively proposing franchise regulations whether imposing pre-contractual
disclosure requirements or seek to regulate the contractual relationship between
franchisors and franchisees.
Recently the World Franchise Council, the umbrella organisation for national
franchise associations, produced non mandatory rules requiring foreign franchisors
wishing to expand into another territory to ensure that their franchise concept has
been tried and tested in the target territory before it is marketed to franchisees, an
approach which has been adopted in the recently published Chinese Franchise
Regulations.
International franchisors will increasingly have to contend with franchise
legislation and adverse court decisions and do need to adopt a strategy to deal with
this. This strategy should not simply ensure that they keep abreast of developments
(which of course they should) but franchisors also need to adopt a best practice
approach about their franchises and they need to look carefully at their contractual
documentation and establish whether provisions are in practice, necessary.
Increasingly franchise agreement will (whether or not specific legislation is passed on
this) have to be seen as fair and reasonable.
- Results of the three based researches on franchising
Franchising is growing, especially for small and medium sized companies, and
recent developments show that franchising is established and is starting to mature in
our country (table 3 and 4). The 1990’s are described as the franchising decade. The
trend continued during the 2002-2005 period, according to the three based researches
i) the third edition of ICAP’s sector based research, ii) the Franchise Success –
Panorama 2006 research and iii) the Logistika research which examine the latest
developments of this institution.
About 65% of franchise networks (concepts) are small and medium sized, with
sales of uρ to 15 million euros. Moreover, about 64% of franchisors are small and
medium sized companies that employ uρ to 100 persons. In 2005, the total number of
active franchisors (i.e. companies with at least one franchising store) was about 400,
compared to 230 in 2001 and 187 in 1998.
According to the findings of the researches, in 2005 the following sectors had the
largest concentration of businesses: "apparel and accessories" (16%) and "foodsdetergents-cosmetics" (also 16%). In terms of numbers of shops, the largest
concentration is found in the "foods-detergents-cosmetics" category (24%) and in
"coffee-snacks-ice creams"(17%). Tables 1 and 2 present the geographical
concentration of franchised stores in Athens and in Greece, respectively.
In 2005, the ratio of stores per business concept reached the ratio of the most
developed markets internationally (USA, France, UK). The percentage of domestic
concepts in 2005 (76.8%) is about the same as in the largest foreign franchise
markets. In France the percentage was 89% (2004) and in Spain 80% (2004), while in
Portugal, which is comparable to Greece in size, this percentage was only 41 %
(2003). Imported concepts operate mainly as master franchises which grant
international franchisors to domestic businessmen. The most popular countries where
these imported concepts originate from are Italy, France and England.
Α significant percentage of franchisors (26%), in 2005 had a presence abroad,
while another significant percentage (46%) is planning to expand its business abroad
8
in the foreseeable future. The most popular country of export for domestic concepts is
Cyprus, followed by the Balkan countries.
The majority of businesses that haνe adopted franchising as a growth method,
began operations after 1990, and this is also the case for franchising itself. Ιn
particular, there is only a two year difference between the time that businesses started
to operate, the first "pilot" store was created, and that franchising began. Franchising
continued to grow in 2002-2004, it entered and diversified new sectors, such as
beauty-fitness-hair salons, foods-detergents-cosmetic (mainly super markets), serνices
(real estate, insurance), information-telecommunications-internet.
Average investments in franchise units are at the same leνel as in the rest of
Europe and in line with the expansion seen in the last four years. Moreover, for
franchisors as a whole, the entrance fee and other periodical fees are still at logical
levels, compared to what is seen internationally.
Franchising growth margins for the coming years are high, considering that
penetration equals to 4% of the total of businesses. Network growth in 2005 is
estimated at 13.7%, while in 2006 it will be rather conservative, at 2.6%. This is
attributed, on the one hand, to financial uncertainty in the business community and on
the other hand to difficulties that franchise businesses haνe in accurately defining their
growth beyond a 12-month period, since this depends on all the factors that affect the
creation of successful cooperation with franchisees.
Table 2 - Geographical concentration of
franchised stores in Greece in 2005
Attica
29,6%
Thessalonica
5,6%
Rest of Macedonia 16,0%
Thrace
4,3%
Epirus
5,2%
Thessaly
8,7%
Crete
3,9%
Peloponnesus
12,4%
Rest of Continental 5,5%
Greece
Aegean islands
6,0%
Ionian islands
2,8%
Total
100,0%
Source: ICAP
Table 1 - Geographical
concentration of franchised stores in
Athens in 2005
North suburbs
17,9%
Centre
18,6%
Piraeus
12,5%
East suburbs
11,2%
West suburbs
12,5%
South suburbs
16,6%
Other
10,7%
Total
100,0%
Source: ICAP
Table 3 – Cumulative distribution network
year Company-owned franchise Shop in a shop
Corner
1999
1562
2612
99
56
2000
1989
3809
166
101
2001
2542
4732
298
110
2002
2808
5639
421
112
2003
3116
6149
593
148
2004
3415
6928
957
137
2005
3758
7856
1005
190
Source: Franchise Success – Panorama 2006
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total
4329
6065
7682
8980
10006
11437
12809
Table 4 – New sales points under franchise
Category
2000
2001
2002
2003
2004
Clothing
141
91
131
90
182
Education
122
156
342
218
134
Super market
91
111
1
53
120
Personal care
177
13
43
16
-89
House equipment
74
3
116
-9
40
Retail
377
411
208
83
267
Restaurant
129
104
59
39
-14
Services
86
34
7
20
139
Total
1197
923
907
510
779
Source: Franchise Success – Panorama 2006
2005
132
73
212
37
11
200
106
157
928
5. Conclusions
Ιn 2000, in Lisbon, ΕU leaders set a common target to make the European Union a
dynamic, internationally competitive economy, based on knowledge. Research and
innovation, investments in new technologies and the successful development of new
technologies, are today considered extremely crucial agents for the development of
European and therefore, Greek companies.
Strengthening small and medium sized businesses in Greece is an urgent need. Το
strengthen means to constantly be alert and to adjust in an environment that changes
rapidly. It entails a continuous search of innovations at all organizational and
production levels and also international cooperation with large distribution networks,
so that expanding in new markets is made easier.
The creation of the right size, which will bring economies of scale and make our
products competitive at an international leνel, could be supported by the franchising
system which contributes to our economic development.
Ιn Greece, the Olympic Games triggered the improvement of infrastructure which
effected positively the economy. Most important, however, is the fact that the
Olympic Games allowed Greek companies to become familiar with the globalization
logic and with anything advanced in the technology, serνices, energy and information
distribution networks. The advantages of better networks will continue to grow as the
ΕU expands in the South-eastern European region. Therefore, a dynamic entrance of
Greek products and serνices in these markets must concern a large number of
businesses, franchise, too.
Keywords
Franchise: (*) means a package of industrial or intellectual property rights relating to trade
marks, trade names, shop signs, utility models, designs, copyrights, know-how or patents, to
be exploited for the resale of goods or the provision of services to end users.
Franchise agreement: (*) means an agreement whereby one undertaking, the franchisor,
grants the other, the franchisee, in exchange for direct or indirect financial consideration, the
right to exploit a franchise for the purposes of marketing specified types of goods and/or
services; it includes at least obligations relating to:
- the use of a common name or shop sign and a uniform presentation of contract premises
and/or means of transport,
- the communication by the franchisor to the franchisee of know-how,
- the continuing provision by the franchisor to the franchisee of commercial or technical
assistance during the life of the agreement.
Franchisor: is the undertaking that grants to franchisee for a direct or indirect financial
consideration, the right to exploit a franchise.
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Franchisee: is the undertaking that is granted the right, by the franchisor, to exploit a
franchise for the purposes of marketing specified types of goods and/or services.
Master Franchisee/ Sub-Franchisor: means an agreement whereby one undertaking, the
franchisor, grants the other, the master franchisee, in exchange of direct or indirect financial
consideration, the right to exploit a franchise for the purposes of concluding franchise
agreements with third parties, the franchisees.
(*) Definition taken from the Commission Regulation (EEC) No 4087/88 of 30 November
1988 on the application of Article 85 (3) of the Treaty to categories of franchise agreements.
References
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