What is a franchise / franchising?
Franchise Definition by the European Franchise Federation (EFF)
Franchisors of national franchise associations are governed by a code of ethical conduct which comprises the "European Code Of Ethics For Franchising" and the national association’s extension and interpretation of this code.
“Franchising is a system of marketing goods and/or services and/or technology, which is based upon a close and ongoing collaboration between legally and financially separate and independent undertakings, the Franchisor and its individual Franchisees, whereby the Franchisor grants its individual Franchisee the right, and imposes the obligation, to conduct a business in accordance with the Franchisor’s concept.
The right entitles and compels the individual Franchisee, in exchange for a direct or indirect financial consideration, to use the Franchisor’s trade name, and/or trade mark and /or service mark, know-how, business and technical methods, procedural system, and other industrial and /or intellectual property rights, supported by continuing provision of commercial and technical assistance, within the framework and for the term of a written franchise agreement, concluded between parties for this purpose.
- "Know-how" means a body of non-patented practical
information, resulting from experience and testing by the Franchisor, which is
secret, substantial and identified;
- "secret" means that the know-how, as a body or in the
precise configuration and assembly of its components, is not generally known
or easily accessible; it is not limited in the narrow sense that each
individual component of the know-how should be totally unknown or unobtainable
outside the Franchisor’s business ;
- "substantial" means that the know-how includes
information which is indispensable to the franchisee for the use, sale or
resale of the contract goods or services , in particular for the presentation
of goods for sale, the processing of goods in connection with the provision of
services, methods of dealing with customers, and administration and financial
management; the know-how must be useful for the Franchisee by being capable,
at the date of conclusion of the agreement, of improving the competitive
position of the Franchisee, in particular by improving the Franchisee’s
performance or helping it to enter a new market .
- "identified" means that the know-how must be described in a sufficiently comprehensive manner so as to make it possible to verify that it fulfills the criteria of secrecy and substantiality ; the description of the know-how can either be set out in the franchise agreement or in a separate document or recorded in any other appropriate form.”
Quelle: Ethikkodex 2004 der European Franchise Federation (EFF)