1. Franchising
Students Roll No
Khan Razique 2015
Adal Godavari 2001
Rajesh Nagraj 2020
Khan Aqib 2002

2. Evolution of Franchising
 The concept of Franchising as we know today 1st started in
Germany in 1840.
 In 1851, Singer Sewing Machine Co. began granting
distribution franchises for its sewing machines. Thus began
the modern concept of franchising.
 The root word “Franchise” comes from old French meaning
privilege/ freedom. In middle ages a franchise was a privilege/
a right.
 Essentially a marketing concept, Franchising is an innovative
method of distributing goods and services.

3. Legal definition of Franchise:
 Black’s Law Dictionary 7th edition
1999 defines Franchise as, “the sole
right granted by the owner of a
trademark or trade name to engage in
business or to sell a good or service in
certain area.”

5. RELATIONSHIP BETWEEN FRANCHISER AND FRANCHISEE
Element The Franchiser The Franchisee
Side Selection Overseas and approves, Choose side with
may choose side Franchiser’s approval
Design Provides prototype Hires, manages, and fires
design employees
Products & Services Determines product Modifies with only
or service line Franchiser’s approval
Price Can only recommend Sets final price
price
Advertising Develops & Coordinates Pays for national ad
national ad campaign campaign

6. Element The Franchiser The Franchisee
Quality Control Sets quality standards Maintain quality
and enforces them with standard ; trains
Inspection employees to
implement quality
systems
Support Provides support & Operates business on a
through an established day-to-day basis with
business system franchiser’s support

13. FRANCHISING BOOM IN INDIA
.There are approximately 1150 national and international business
format franchise systems in India in 2012.
Around 8 to 10 per cent Indian franchise systems have entered
international markets.
There are an estimated 70, 000 units operating in business format
franchises.
The growth rate in franchised units from 2010-11 to 2011-12 was 30 to
35 per cent for the last 4-5 years.
Some 500000 persons are employed in business format franchise
organizations.
Franchising contributed less than 4 per cent to India’s Gross Domestic
Product (GDP) in 2012.
Annual turnover is approximately us$ 4 billion

14. Franchising and the law
 Uniform Franchise Offering Circular
(UFOC)
• Requires franchisers to disclose to
potential franchises information on 23
important topics
• Idea is to give franchises the
information they need to protect
themselves from dishonest franchisers
and to make good investment decision

15. CAREFUL THINGS IN FRANCHISING
 The franchisee is not completely independent.
 In addition to the initial franchise fee, franchisee must pay ongoing
royalties and advertising fees.
 Franchisee must be able to balance restrictions and support provided
by the franchisor with their own ability to manage the business
 A damaged image or franchise system can result if other franchisees
perform poorly or the franchisor has financial problems.
 The duration of a franchise is usually limited and the franchisee may
have little or no say concerning termination

16. ADVANTAGES OF FRANCHISING
Your business is based on a proven idea. You can check how successful
other franchises are before committing yourself.
You can use a recognized brand name and trade marks. You benefit
from any advertising or promotion by the owner of the franchise - the
'franchisor'.
The franchisor gives you support - usually including training, help
setting up the business, a manual telling you how to run the business
and ongoing advice.
You usually have exclusive rights in your territory. The franchisor won't
sell any other franchises in the same territory.
Financing the business may be easier. Banks are sometimes more
likely to lend money to buy a franchise with a good reputation.

17. DISADVANTAGES OF FRANCHISING
Costs may be higher than you expect. As well as the initial costs of
buying the franchise, you pay continuing management service fees
and you may have to agree to buy products from the franchisor.
 The franchise agreement usually includes restrictions on how you run
the business. You might not be able to make changes to suit your local
market.
 The franchisor might go out of business.
 Other franchisees could give the brand a bad reputation.
 You may find it difficult to sell your franchise - you can only sell it to
someone approved by the franchisor.
 All profits are shared with the franchiser

18. The Right Way to Buy a
Franchise
 Evaluate yourself – What do you like and dislike?
 Research your market.
 Consider your franchise your options.
 Get a copy of the franchiser’s Uniform Franchise
Offering Circular (UFOC) and read it.
 Talk to existing franchisees.
 Ask the franchiser some tou8gh questions.
 Make your choice.

24. SHREEJI SHREEJI BRANCHES
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