What is a franchise?

The Rules of the Franchise Association of New Zealand contain the following definition for a franchise:

Franchise means the method of conducting business under which the right to engage in the offering, selling or distributing of goods or services within New Zealand includes or is subject to at least the following features:

• The grant by a Franchisor to a Franchisee of the right to the use of a Mark, in such a manner that the business carried on by the Franchisee is or is capable of being identified by the public as being substantially associated with a Mark identifying, commonly connected with or controlled by the Franchisor; and

• The requirement that the Franchisee conducts the business, or that part of the business subject to the Franchise Agreement, in accordance with the marketing, business or technical plan or system specified by the Franchisor; and

• The provision by the Franchisor of ongoing marketing, business or technical assistance during the term of the Franchise Agreement.''

Franchising comes under the brand heading of licensing. The term "licensing" can describe any contractual relationship from the right to use a trade mark to the right to distribute a product. It can also describe the structured franchise-type relationship apparent in an organisation such as Subway.