Franchising
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Transcript of Franchising
Group 440 By Aygun Hajiyeva
History of Franchising
The concept of franchising as we know today 1st started in Germany
In 1851, Singer Sewing Machine Co. began granting distribution franchises for its sewing machine. Thus began the modern concept of franchising
The root word “Franchise” comes from old French meaning privilege/freedom.
Franchise system
Franchise Franchisor Franchisee
A Franchise is a license granted by a business to another business to make and sell goods/ services
A Franchisor is the owner of the business who grants the license
A Franchisee is the person who purchases the business name
Types of Franchise
Business Format
Franchise
Product or Trade name
Franchise
dealership
Unit Franchise
Master and Regional
Franchises
Business Format Franchise
The most popular form of Franchising A Franchisor teaches to the franchisee
the entire businesses format Allows using trademark Advertising Fast food restaurants are good examples
Product or Trade name Franchise
Only involves product Manufacture grants a franchisee the
right to sell its product but with no method of doing business
Allows using trademark
Dealership or Distributorship, Licenses, Agencies
Allows to sell Franchiser product under their own trademark
Own the rights to sell products on behalf of a supplier
Manufacturing and unit Franchise
One of the lesser-known franchise structures is called a manufacturer franchise
The franchisee would only be responsible for running one unit
Master Franchisee
A Master Franchisee is granted the rights to a substantial territory, usually a whole country
Regional Franchisee
In a Geographically large area Master Franchisee may decide to appoint Regional Franchisee
Multiple Franchisee
Some Franchisees operates not just one unit but several
Advantage of Franchise
Increase number of outlet with minimum capital
Name recognition Running small business under Franchise
name is very beneficial Big Business help in corporate marketing Proper and effective marketing tactic
Disadvantage of Franchise
Frightening Franchise Fees Outrageous Royalty Fees Bloated Raw Material Cost Most Franchises don`t provide financing Competition Creep A Creative Black Hole Complex Procedure