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FRANCHISING

RAJKUMAR PR S1 MBA MGT 1005429

FRANCHISE
A form of business where the franchisor sells or provides to a franchisee:

the right to do business under a particular trade name or brand the right to use/sell a proprietary product, process, or service training and assistance in setting up the business a business and marketing plan economies of scale for purchasing and marketing

Ctnd
Entrepreneurship

for people that are not particularly entrepreneurial. regular inspection and quality checks once the business is established a financial (accounting) system

FRANCHISING ????
Arrangement

where one party (the franchiser) grants another party (the franchisee) the right to use its trademark or trade-name as well as certain business systems and processes, to produce and market a good or service according to certain specifications. The franchisee usually pays a one-time franchise fee plus a percentage of sales revenue as royalty, and gains (1) immediate name recognition, (2) tried and tested products, (3) detailed techniques in running and promoting the business, (4) training of employees, and (5) ongoing help in promoting and upgrading of the products.

Franchisor

- The party in the franchise contract that specifies the


methods to be followed and the terms to be met by the other party

Franchisee

- An entrepreneur whose power is limited by a


contractual agreement with a franchisor

TYPES OF FRANCHISE

3 main types of franchise


Product

distribution franchise;

Business

format franchise; and Management franchise

PRODUCT DISTRIBUTION FRANCHISES


A

product distribution franchise model is very much like a supplier-dealer relationship. the franchisee merely sells the franchisors products. However, this type of franchise will also include some form of integration of the business activities.

Typically,

Produces the syrup concentrate Sells the syrup concentrate

FRANCHISEE

Produces the final drink

Retail Stores Restaurants & F&B Outlets Vending Machine Operators

BUSINESS FORMAT FRANCHISING


In

a business format franchise, the integration of the business is more complete. franchisee not only distributes the franchisors products and services under the franchisors trade mark, but also implements the franchisors format and procedure of conducting the business.

The

outlet in Sale, Australia

outlet in Marseille, France

MANAGEMENT FRANCHISES
A

form of service agreement The franchisee provides the management expertise, format and/or procedure for conducting the business.

FRANCHISOR CONTROLS ON FRANCHISEES


Restricting

of sales territory Requiring site approval and imposing requirement on the outlets appearance Restricting the goods/ services that can be sold Requiring specific operating hours Controlling advertising

FRANCHISING BENEFITS BOTH THE FRANCHISER & THE FRANCHISEE


Benefits to the Franchiser The key to rapid growth, eg: NIIT Lower capital requirements Motivation franchisors are owners of the franchise Control of locations Revenue stream franchise fees/royalties Helps brand building

Benefits to Franchisee Benefit of an instant connection with a premium brand Visibility and standing in the market Promotion cost are often brone by the franchiser Helps get out of margin wars Systems / software supprot

THANK

YOU

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