Franchising as a Business Model and Impact on Market Competition

Abstract

There are different business models of business entities. When starting your own business, it is necessary to have an elaborate business strategy in which business entities must count on what popularity their products or services will have. Successful business depends on a number of factors, the most important of which are the possibility of entering the market and the degree of competitiveness of business entities operating in that market. Regardless of the business strategy, business entities that operate independently take a greater risk of possible business failure. Business entities that are independently starting business, already at the beginning, are faced with problems of entering the market. The problems are mainly related to the existence of administrative barriers, high taxes, difficulties in financing, the strength of competition, and the time needed to develop a business and build its own market position. There is a business model that can reduce the risk of independent business, while being profitable and bring business success to an economic entity that opts for this type of business. It is about franchising as a business model that refers to running your own business under the name of a well-known brand. The paper will show and explain what franchising is, its emergence and development, the basic characteristics and types of franchising, the franchising agreement, the prohibited agreements and exemptions from the prohibition in competition law, and with that, franchising as a restrictive vertical agreement and the impact it has on market competition.