What is Franchising?

Quick Definition

Franchising is a long-term continuing business relationship between a franchisor, who grants to the franchisee a licensed right to conduct business, utilizing any or all of the following: trade mark, service mark, trade name, logo, premises and furnishings design, advertising, business organization, marketing techniques, training, subject to specific requirements and restrictions.

Expanded Definition

The Ontario Government uses a broader definition of franchising in the Arthur Wishart Act [franchise disclosure legislation].

"Franchise" means a right to engage in a business for which the franchisee is required to make a payment or continuing payments, or a commitment to make such payment or payments, to the franchisor, or the franchisor's associate, as a condition of acquiring the franchise or commencing operations and,

1. in which,
   1. the franchisor grants the franchisee the right to sell, offer for sale or distribute goods or services that are substantially associated with the franchisor's, or the franchisor's associate's, trademark, service mark, trade name, logo or advertising or other commercial symbol, and
   2. the franchisor or the franchisor's associate exercises significant control over, or offers significant assistance In, the franchisee's method of operation, including building design and furnishings, locations, business organization, marketing techniques or training,
   or
   
   
2. in which,
   1. the franchisor, or the franchisor's associate, grants the franchise the representational or distribution rights, whether or not a trademark, service mark, trade name, logo or advertising or other commercial symbol is involved, to sell, offer for sale or distribute goods or services supplied by the franchisor or a supplier designated by the franchisor, and
   2. the franchisor, or the franchisor's associate, or a third person designated by the franchisor, provides location assistance, including securing retail outlets or accounts for the goods or services to be sold, offered for sale or distributed or securing locations or sites for vending machines, display racks or other product sales displays used by the franchisee.

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