Franchise

Specialist fashion multiples occasionally operate on a franchise basis where the store is run by a franchisee who purchases all of the products from the franchisor .The franchise contract obliges the franchisee to pay an initial start up fee and subsequent royalties to the franchisor. This may seem a relatively expensive method of setting up a retail business yet it could be argued that the franchise has a good chance of success from trending under an established brand name with the overheads of range planning, product development and promotion being borne by the franchisor. Franchising is rare with in the fashion market, the most well known example being the Italian company Benetton. The advantage to the franchisor is that the brand can expend with the minimum of investment in now stores as well as benefit of regular income from franchisees.