Franchising (from the French for honesty or freedom) is a method of doing business wherein a “franchiser” authorizes proven methods of doing business to a “franchisee” for a fee and a percentage of sales or profits. Various tangibles and intangibles such as national or international advertising, training and other support services are commonly made available by the franchiser, and may indeed be required by the franchiser, which generally requires audited books, and may subject the franchisee or the outlets to periodic and surprise spot checks. Failure of such tests typically involves non-renewal or cancellation of franchisee rights.
As practiced in retailing, franchising offers franchisees the advantage of starting up a new business quickly based on a proven trademark and formula of doing business, as opposed to having to build a new business and brand from scratch (often in the face of aggressive competition from franchise operators). A well run franchise would offer a turnkey business: from site selection to lease negotiation, training, mentoring and ongoing support as well as statutory requirements and troubleshooting.
After their brand and formula are carefully designed and properly executed, franchisers are able to expand rapidly across countries and continents and can earn profits commensurate with their contribution to those societies. Additionally, the franchiser may choose to leverage the franchisee to build a distribution network. Also with the help of the expertise provided by the franchisers the franchisees are able to take their franchise business to that level which they wouldn’t have had been able to without the expert guidance of their franchisers.
Franchisers often offer pharma franchisees significant training, which is not available for free to individuals starting their own business. Although training is not free for franchisees, it is supported through the industry consolidation necessitates a more rigorous focus on specific therapeutic franchises. The growing importance of the pharma franchise results in pharmaceutical companies that are structured and managed like consumer brand companies, with the franchise regarded as a semi-independent business unit. As with any corporation, pharma franchises require planning, implementation and management.