The franchising authority may retain control over and responsibility for common functions, such as marketing. Within the category of franchises distinction is usually made between gross cost and net cost franchises. In gross cost franchises all revenue accrues to the government and the contracts are usually let on the basis of the least total cost supplier. In net cost franchises the franchisee keeps all the revenues. The franchisee carries revenue as well as cost risk.
Operators cover investment costs and carry commercial risks.
The agreements are for constructing or rehabilitating infrastructure and operating a facility or service for a fixed period. In the third category, ownership and control has been completely transferred to the private sector, subject only to the general commercial law of the land. In this case the only regulation that is appropriate is that excercised through whatever general monopoly and restrictive practices legislation and institutions exist. Government has abrogated all sector specific powers of intervention in this category. Return to top of document Creation of Competitors Competitive market forms are of little worth unless there are some effective competitors.