Crunch and Munch is the country\'s favorite fast-food vendor of fried chicken. O

Question

Crunch and Munch is the country's favorite fast-food vendor of fried chicken. Over the years, the company has diversified into providing a larger variety of snacks like hot dogs, burritos, and burgers, but consumers still consider it the best seller of fried chicken. Many potential investors have approached Crunch and Munch with offers to buy the company, but Crunch and Munch continues to operate through its stores. What is franchising? Why would franchising be a good contractual system for Crunch and Munch?

Explanation / Answer

Answer: Franchising is a form of contractual business agreement in which a business party known as the franchisor grants the rights to use its trademark/name along with certain business systems and processes to another party known as franchisee for production of goods and services. The Franchisee has to follow the terms and specifications of the franchisor while it produces products and services for which it has a franchisee rights.

As it appears form the scenario that Crunch and Munch do not want to sell their business operations and at the same time they also want to expand their operations. Therefore franchising will be one of the best options for them. Firstly they will not need to invest more money for expanding their network and at the same time they will also be able to keep a control over their franchisee operations through the terms and conditions of their franchisee agreement.     

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