Presented byPresented by : : MD MANZOOR ALAMMD MANZOOR ALAM : MBA 2nd Year: MBA 2nd Year : Enrol: Enrol. . No. 1503010319No. 1503010319

FRANCHISINGFRANCHISING

Under the Guidance ofUnder the Guidance of::

Dr. Reshma NikhatDr. Reshma NikhatAssistant ProfessorAssistant Professor

School of Business ManagementSchool of Business Management

MANUU, MANUU, HyderabadHyderabad

AGENDAAGENDA• Advantage & Advantage &

Disadvantage to the Disadvantage to the franchiseefranchisee

• Advantage & Advantage & Disadvantage to the Disadvantage to the franchisorfranchisor

• Domino’sDomino’s• HistoryHistory• Marketing Marketing

Tactics(4P’s)Tactics(4P’s)• Conclusion Conclusion

• AgendaAgenda• IntroductionIntroduction• What is it?What is it?• DefinitionsDefinitions of termof term• TypeType• P.D. FranchiseP.D. Franchise• B.F. FranchiseB.F. Franchise

WHAT IS IT?WHAT IS IT?• Normally referred to asNormally referred to as

““Business Format Franchising”Business Format Franchising”• A contractual long-term relationshipA contractual long-term relationship• Grant of a licence to franchisee Grant of a licence to franchisee • Franchisee gets:Franchisee gets:

Tried and tested product/serviceTried and tested product/service Profitable proven business model to Profitable proven business model to

followfollow Experience and know-how of the Experience and know-how of the

franchisorfranchisor Entitlement to use the trade name / markEntitlement to use the trade name / mark Entire packageEntire package

EXAMPLESEXAMPLES

EXAMPLESEXAMPLES

IntroductionIntroductionFranchising: A network of interdependent business A network of interdependent business relationships that allows a number of people to share: relationships that allows a number of people to share:

1. 1. A brand identificationA brand identification

2. A successful method of 2. A successful method of doing businessdoing business

3. A proven marketing and 3. A proven marketing and distribution systemdistribution system

DEFINITION OF TERMSDEFINITION OF TERMS

Franchisor / FranchiserFranchisor / Franchiser::the person or company that grants the franchisee the right to do business under their trademark or trade name.

FranchiseeFranchisee::the person or company that gets the right from the franchisor to do business under the franchisor’s trademark or trade name and benefits from it.

DEFINITION OF TERMSDEFINITION OF TERMS

Franchise AgreementFranchise Agreement::the legal, written contract between the franchisor and franchisee which tells each party what each is supposed to do.

Single-Unit Franchise AgreementSingle-Unit Franchise Agreement::an agreement where the franchisor grants the franchisee the rights to open and operate ONE franchise unit.

DEFINITION OF TERMSDEFINITION OF TERMS

Multi-Unit Franchise AgreementMulti-Unit Franchise Agreement::an agreement where the franchisor grants a franchisee the rights to operate more than one unit.

Area Development Franchise AgreementArea Development Franchise Agreement::an agreement where the franchisee has the right to open more than one unit during a specific time, within a specific area.

DEFINITION OF TERMSDEFINITION OF TERMSMaster Franchise AgreementMaster Franchise Agreement::

an agreement where the franchisee is given more rights than an area development agreement; such as sub-franchising or the right to sell franchises to other people within a territory.

UFOC / Disclosure StatementUFOC / Disclosure Statement::the Uniform Franchise Offering Circular is the disclosure document that provides the information about the franchisor and franchise system to a prospective franchisee.

DEFINITION OF TERMSDEFINITION OF TERMS

Franchise/ Initial FeeFranchise/ Initial Fee::the payment given to the franchiser for joining the network. It can be seen as an entry fee paid for the “secrets of the business”.

Royalty / Management FeeRoyalty / Management Fee::represents the amount the franchisee pays the franchiser every month (or whenever agreed) for commission of its sales. In return, the franchiser provides continuous training, market studies and release of new products.

TWO MAIN TYPES OF FRANCHISING

• PRODUCTION DISTRIBUTION PRODUCTION DISTRIBUTION FRANCHISEFRANCHISE

• BUSINESS FORMAT FRANCHISEBUSINESS FORMAT FRANCHISE

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Franchise that simply sells the products of the franchisor and Franchise that simply sells the products of the franchisor and have supplier-dealer relationshipshave supplier-dealer relationships

The franchisor licenses its trademarks and logo to the The franchisor licenses its trademarks and logo to the franchisee but does not necessarily provide them with an franchisee but does not necessarily provide them with an ENTIRE system for running their businessENTIRE system for running their business

Usual examples: soft drink distributors, automobile dealers Usual examples: soft drink distributors, automobile dealers and gas stationsand gas stations

PRODUCT DISTRIBUTION FRANCHISEPRODUCT DISTRIBUTION FRANCHISE

BUSINESS FORMAT FRANCHISE

Type of franchise includes not only the a product, service Type of franchise includes not only the a product, service and trademark but also the complete method to conduct and trademark but also the complete method to conduct the business itself, such as the marketing plan and the business itself, such as the marketing plan and operations manual.operations manual.

Usual examples: fast food, service, restaurants, retail, Usual examples: fast food, service, restaurants, retail, lodging, automotive, building & construction.lodging, automotive, building & construction.

ADVANTAGES & DISADVANTAGES OF FRANCHISING

ADVANTAGESADVANTAGES DISADVANTAGESDISADVANTAGESTo the FranchiseeTo the Franchisee

Established ConceptEstablished ConceptTools for SuccessTools for Success

Technical & Managerial HelpTechnical & Managerial HelpStandards & Quality ControlStandards & Quality Control

Minimum RiskMinimum RiskLess Operating CapitalLess Operating Capital

Access to CreditAccess to CreditComparative AssessmentComparative AssessmentResearch & DevelopmentResearch & Development

Advertisement & Promotion Advertisement & Promotion Other Opportunities Other Opportunities

Unfulfilled ExpectationsUnfulfilled ExpectationsLack of FreedomLack of Freedom

Advertisement & Promotion Advertisement & Promotion PracticesPractices

Cost of ServicesCost of ServicesOver DependenceOver Dependence

Monotony & Lack of ChallengeMonotony & Lack of ChallengeTermination and RenewalTermination and Renewal

Other problemsOther problems

ADVANTAGESADVANTAGES DISADVANTAGESDISADVANTAGESTo the FranchiserTo the Franchiser

Business ExpansionBusiness ExpansionBuying PowerBuying PowerOperational Operational ConvenienceConvenienceFranchisee’s Franchisee’s ContributionContributionMotivation & Motivation & CooperationCooperation

Lack of FreedomLack of FreedomFranchisee’s Financial Franchisee’s Financial

SituationSituationFranchisee Franchisee

Recruitment, Selection Recruitment, Selection and Retentionand Retention

CommunicationCommunication

ADVANTAGES & DISADVANTAGES OF FRANCHISING

HISTORYHISTORYFounded in 1960 by Tom Monaghan.Founded in 1960 by Tom Monaghan.• Second-largest Pizza chain in the United Second-largest Pizza chain in the United

States. States.• about 8,500 corporate and franchised about 8,500 corporate and franchised

stores in 55 countries.stores in 55 countries.• Domino's Pizza outlet in India opened in Domino's Pizza outlet in India opened in

1996. 1996.• Close to 274 outlets in 55 cities of India.Close to 274 outlets in 55 cities of India.• 70 percent of its revenue comes from 70 percent of its revenue comes from

home delivery service & around 30 home delivery service & around 30 percent is over-the-counter sales. percent is over-the-counter sales.

MARKETING TACTICS (4P’s)

PRODUCTPRODUCT PizzasPizzas PastasPastas BreadsticksBreadsticks Cheese DipsCheese Dips BeveragesBeverages ChocolavaChocolava

PRICEPRICE

PLACEPLACE

Dominos has distributed in 4 partDominos has distributed in 4 part

WESTEN REGION SOUTN REGIONWESTEN REGION SOUTN REGION

NORTH REGION ESTERN REGION NORTH REGION ESTERN REGION

PROMOTIONPROMOTION

• Customers can order their Customers can order their pizzaspizzas• by calling a single by calling a single

countrywide Happiness countrywide Happiness HotlineHotline 1800-111-123. 1800-111-123. In In fact,fact,• Delivering in Delivering in 30 minutes30 minutes

• GIFT COUPENGIFT COUPEN• AdvertisingAdvertising Tv Ads.NewspaperTv Ads.Newspaper Hungry Kya?’,Hungry Kya?’, Khushiyon ki Home Khushiyon ki Home

DeliverDeliver

• SALE PROMATIONSALE PROMATION• BogoBogo

• Corprate discountCorprate discount

• PERSONAL SELLINGPERSONAL SELLING

• Door hangingDoor hanging

Conclusion:

Although any type of business can be franchised, not Although any type of business can be franchised, not every franchise succeeds.every franchise succeeds.

There is no doubt that franchising offers an ideal There is no doubt that franchising offers an ideal blueprint for business success, but if the foundation blueprint for business success, but if the foundation of the franchise is not solid there is little chance of of the franchise is not solid there is little chance of success. Being financially sound, having a strong success. Being financially sound, having a strong management strategy, a strong brand and a family of management strategy, a strong brand and a family of motivated and profitable franchisees – all go together motivated and profitable franchisees – all go together to achieve long – term success of the franchise.to achieve long – term success of the franchise.

Thank YouThank You

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