Understanding Franchising

What defines a business as a franchise? Business format franchising can be explained as the granting of a license by one person (the franch...

What defines a business as a franchise?
Business format franchising can be explained as the granting of a license by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade under the trade mark/trade name of the franchisor and to make use of an entire package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continual assistance on a predetermined basis.

Legal Implications of a franchise

Under a Franchise, the two parties the Franchisor and Franchisee are two separate legal entities. What passes from the Franchisor to the Franchisee is simply its trademark.

Examples of Franchises operating in Nigeria
• KFC Being operated by Devyani International Limited
• Mr Biggs being operated by several Franchisors across the country
• Oando Filling Stations across the nation
• Nandos, Coldstone Creamery etc

Franchising and Accounting Networks : The Big Four Accounting Firms issue
According to CAMA, a company auditor must be a member of ICAN or ANAN. For this reason, a limited liability company cannot be a company auditor.

When we see PwC auditing a company, it is simply a group of qualified ICAN or ANAN members practicing under the name PwC. However, other services that do not have the restrictions of CAMA like training etc might be carried out by PwC Limited. For this reason, some people are partners while some are Directors.

Hope this clarifies things.