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Franchising DreamsThe Lure of Entrepreneurship in America$
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Peter M. Birkeland

Print publication date: 2002

Print ISBN-13: 9780226051901

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226051925.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 26 May 2022

Franchise Fundamentals

Franchise Fundamentals

(p.16) Chapter 2Franchise Fundamentals
Franchising Dreams

Peter M. Birkeland

University of Chicago Press

This chapter examines three basic components that are features of all franchise systems: royalties, trademarks, and long-term contracts. It demonstrated how these components function and, in particular, how they impact franchisee survival rates at King Cleaners, Sign Masters, and Star Muffler. Competition among franchisees changes the value of the trademark. It is noted that the prices for services given by Star Muffler is a major source of contention among franchisees. Franchisees and franchisors agree that the royalty is a “right” of the company, the price for their expertise, and assumed to be an operating expense for franchisees. The long-term nature of contracts is one of the defining characteristics of franchising, and it is an aspect of the strategy that seems to serve franchisors and franchisees well. Furthermore, it is believed that the short-lived tenure of franchisees is surely due to something other than contracts, trademarks, and royalties.

Keywords:   royalties, trademarks, long-term contracts, King Cleaners, Sign Masters, Star Muffler, franchisees, franchisors, franchising

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