Fran chising in Serbia Business concept   for economic and entrepreneurial growth in Serbia Univer sity of Novi Sad UNESCO...
<ul><li>Fran chising in Serbia </li></ul><ul><li>Fran chising  –  concepts ,  forms </li></ul><ul><li>Fran chising in Serb...
<ul><li>PART I </li></ul><ul><li>FRAN CHISING </li></ul><ul><li>(terms,  forms ) </li></ul>
1. Franchising <ul><li>Fran chising from 4 perspectives : </li></ul><ul><ul><ul><li>franchising from  economic perspective...
1. Fran chising <ul><li>Fran chising from economic perspective </li></ul><ul><li>Objective of the lecture –  how franchisi...
1. Fran chising   Fran chising from legal perspective <ul><li>Franchise Agreement  –  the most important document which re...
1. Fran chising   Fran chising from the perspective of Franchisor <ul><li>Strate gic decision </li></ul><ul><li>Franchisor...
1. Fran chising   Advantages and disadvantages for Franchisor <ul><li>Disadvantages : </li></ul><ul><li>development of sen...
1. Fran chising   Advantages and disadvantages for Franchisee <ul><li>Disadvantages : </li></ul><ul><li>limited freedom of...
1. Fran chising <ul><li>Basic concepts </li></ul>Taken from   An Introduction to Franchising
1. Fran chising <ul><li>Basic concepts </li></ul><ul><li>FRAN CHISE  –  comes from the French word   franchir ,  meaning r...
1. Fran chising <ul><li>Basic concepts </li></ul><ul><li>FRAN CHISING  –  agreement form of vertical marketing system in t...
1. Fran chising <ul><li>Basic concepts </li></ul><ul><li>FRANCHISE AGREEMENT  –  agreement of a more continuous business c...
1. Fran chising <ul><li>Basic concepts </li></ul><ul><li>FRANCHISOR –  a legally independent firm which, owing to its mult...
1. Fran chising <ul><li>Basic concepts </li></ul><ul><li>FRANCHISING SYSTEM or FRANCHISING NETWORK  –  a collection of con...
1. Fran chising <ul><li>Forms of franchising </li></ul><ul><li>1.  Product distribution franchising </li></ul><ul><li>2.  ...
1. Fran chising <ul><li>Product distribution franchising </li></ul><ul><li>Isaac Singer  and   Singer Sewing Machine Compa...
1. Fran chising <ul><li>Product distribution franchising </li></ul><ul><li>Fran chising of the first generation </li></ul>...
1. Fran chising <ul><li>Business format franchising </li></ul><ul><li>Today’s most present form of franchising </li></ul><...
1. Fran chising <ul><li>Unit and multi-unit franchising </li></ul><ul><li>Division made according to the way of franchise ...
<ul><li>PART II </li></ul><ul><li>FRAN CHISING IN SERBIA </li></ul><ul><li>( business concept for economic and entrepreneu...
2. Fran chising in Serbia <ul><li>Dom estic franchise networks </li></ul><ul><li>There are 15-20 domestic franchise networ...
2. Fran chising in Serbia <ul><li>Domestic franchise networks </li></ul>
2. Fran chising in Serbia <ul><li>Dom estic franchise networks </li></ul>
2. Fran chising in Serbia <ul><li>Foreign franchise networks </li></ul>
2. Fran chising in Serbia <ul><li>Foreign franchise networks </li></ul>
2. Fra nchising in Serbia <ul><li>The first franchise conference </li></ul><ul><li>The first franchise conference in Serbi...
2. Fran chising in Serbia <ul><li>The first franchise conference </li></ul><ul><li>Serbia: Franchising Market   – a report...
2. Fran chising in Serbia <ul><li>Business concept for economic growth of Serbia </li></ul><ul><li>Fran chising is not a g...
2. Fran chising in Serbia <ul><li>Fran chising and unemployment rate reduction  </li></ul><ul><li>Unemployment is one of t...
2. Fran chising in Serbia <ul><li>Small players join big players </li></ul><ul><li>Owners of retail shops are faced with f...
2. Fra nchising in Serbia <ul><li>N ew franchise networks </li></ul><ul><li>Anyone can name at least 1 domestic business w...
2. Fran chising in Serbia <ul><li>What now ? </li></ul><ul><li>Based on the existing examples we see that franchising does...
2. Fran chising in Serbia <ul><li>Something IS happening ... </li></ul><ul><li>The year 2007 is a milestone in franchise d...
<ul><li>PART III </li></ul><ul><li>RE/MAX </li></ul><ul><li>Mr.  Miodrag Kušić, </li></ul><ul><li>Regional Director of RE/...
3. RE/MAX <ul><li>Case Study </li></ul><ul><li>RE/MAX –  leader at the real estate market in the USA, Canada and other mos...
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Franchising In Serbia

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Franchising In Serbia

  1. 1. Fran chising in Serbia Business concept for economic and entrepreneurial growth in Serbia Univer sity of Novi Sad UNESCO Chair of Entrepreneurial Studies Fa culty of Technical Sciences Novi Sad, November 13 th , 2007. Lecturers : Goran Sečujski Miodrag Kušić (RE/MAX)
  2. 2. <ul><li>Fran chising in Serbia </li></ul><ul><li>Fran chising – concepts , forms </li></ul><ul><li>Fran chising in Serbia – business concept for economic and entrepreneurial growth </li></ul><ul><li>RE/MAX – case study </li></ul>
  3. 3. <ul><li>PART I </li></ul><ul><li>FRAN CHISING </li></ul><ul><li>(terms, forms ) </li></ul>
  4. 4. 1. Franchising <ul><li>Fran chising from 4 perspectives : </li></ul><ul><ul><ul><li>franchising from economic perspective </li></ul></ul></ul><ul><ul><ul><li>f ran chising from legal perspective </li></ul></ul></ul><ul><ul><ul><li>f ran chising from the perspective of Franchiser </li></ul></ul></ul><ul><ul><ul><li>f ran chising from the perspective of Franchisee </li></ul></ul></ul>
  5. 5. 1. Fran chising <ul><li>Fran chising from economic perspective </li></ul><ul><li>Objective of the lecture – how franchising can contribute economic growth of Serbia </li></ul><ul><li>Po sitive social-economic impacts of franchising on other countries’ economies </li></ul><ul><li>Form of vertical cooperation </li></ul><ul><li>Business concept based on association of producers, wholesale and retail into a unique functional system </li></ul>
  6. 6. 1. Fran chising Fran chising from legal perspective <ul><li>Franchise Agreement – the most important document which regulates relations in the franchise network </li></ul><ul><li>Original Agreements – up to 3 pages </li></ul><ul><li>Present Agreements – more than 50 pages </li></ul><ul><li>Franchise Agreement as a complex creation of autonomous economic law (l icense , know-how) </li></ul><ul><li>Ethical codex in the USA of the 70’s </li></ul><ul><li>UFOC (Uniform franchise offering circular) – general rules of performing business in franchising systems </li></ul>
  7. 7. 1. Fran chising Fran chising from the perspective of Franchisor <ul><li>Strate gic decision </li></ul><ul><li>Franchisor : decision regarding franchising system of distribution , procedure s , training , control system , protection of trade name and trade mark , conditions which need to be fulfilled by a potential user ... </li></ul><ul><li>Franchisee : decision regarding entering a franchising system, fees, control level ... </li></ul><ul><li>Advantages and disadvantages for both parties </li></ul>
  8. 8. 1. Fran chising Advantages and disadvantages for Franchisor <ul><li>Disadvantages : </li></ul><ul><li>development of sense of independence and egotism with users, after the period of danger </li></ul><ul><li>difficulties with standard controlling </li></ul><ul><li>difficulties with hiring the best staff </li></ul><ul><li>more delicate interpersonal relations </li></ul><ul><li>success often depends on the way users think </li></ul><ul><li>Advantages : </li></ul><ul><li>a small amount of capital needed for fast growth </li></ul><ul><li>a potentially high growth rate </li></ul><ul><li>highly motivated and committed local management </li></ul><ul><li>lower administration costs and less administration problems </li></ul><ul><li>continuous protection of trade mark through contract </li></ul><ul><li>faster ascertainment of the national image </li></ul><ul><li>destroys competition </li></ul>
  9. 9. 1. Fran chising Advantages and disadvantages for Franchisee <ul><li>Disadvantages : </li></ul><ul><li>limited freedom of decision making </li></ul><ul><li>necessary accordance with agreement and standards </li></ul><ul><li>finan cial obligations towards Franchisor </li></ul><ul><li>Advantages : </li></ul><ul><li>deficiency of expertise is compensated with training </li></ul><ul><li>Franchisee performs business by themselves and for themselves-Franchisee is a legally independent organization </li></ul><ul><li>smaller risk of failure </li></ul><ul><li>smaller amount of initial capital </li></ul><ul><li>use of a brand name and image </li></ul><ul><li>standard product and quality </li></ul><ul><li>continuous expert help </li></ul><ul><li>group relieves for supply </li></ul>
  10. 10. 1. Fran chising <ul><li>Basic concepts </li></ul>Taken from An Introduction to Franchising
  11. 11. 1. Fran chising <ul><li>Basic concepts </li></ul><ul><li>FRAN CHISE – comes from the French word franchir , meaning right or privilege. Defini tion – a right of a firm (Franchisee) to sell products/services of another firm (Franchisor) by using its trade mark or service mark and its experience in a certain industry. For the use of the right, Franchisee pays an agreed upon fee, and Franchisor retains the right to control the application of the license law, apart from the obligation of providing constant support to the user. </li></ul>
  12. 12. 1. Fran chising <ul><li>Basic concepts </li></ul><ul><li>FRAN CHISING – agreement form of vertical marketing system in the distribution channel </li></ul><ul><li>A method of market expansion of a firm (Franchisor) based on distribution of products/services through a developed network of cooperation relations with other legally independent firms (Franchisees) which perform business under Franchisor’s trade mark or service mark , whereby Franchisor provides constant support and performs control with charging the agreed upon fee for the license rights. </li></ul>
  13. 13. 1. Fran chising <ul><li>Basic concepts </li></ul><ul><li>FRANCHISE AGREEMENT – agreement of a more continuous business cooperation with which Franchisor is obligated to perform periodic deliveries and certain economic services, as well as to transfer knowledge and experience regarding the fields of production and business performing to Franchisee , and with which Franchisee is obligated to pay an award to Franchisor for service providing and to observe the obligations from the Agreement in Franchisee’s business performing. </li></ul>
  14. 14. 1. Fran chising <ul><li>Basic concepts </li></ul><ul><li>FRANCHISOR – a legally independent firm which, owing to its multiannual business experience in a certain field, has developed a successful trade mark or service mark and business concept which it can easily project to another legally independent firm </li></ul><ul><li>FRANCHISEE – a firm which performs business by itself and for itself, but which uses the given rights regarding the use of trade mark or service mark and the rules of performing business of another firm, for which it pays the agreed upon fee. </li></ul>
  15. 15. 1. Fran chising <ul><li>Basic concepts </li></ul><ul><li>FRANCHISING SYSTEM or FRANCHISING NETWORK – a collection of connections and relations between Franchisor and all Franchisees. </li></ul>
  16. 16. 1. Fran chising <ul><li>Forms of franchising </li></ul><ul><li>1. Product distribution franchising </li></ul><ul><li>2. Business format franchising </li></ul>
  17. 17. 1. Fran chising <ul><li>Product distribution franchising </li></ul><ul><li>Isaac Singer and Singer Sewing Machine Company – the second part of the 19 th century </li></ul><ul><li>Creates a dealer network of sewing machine sellers </li></ul><ul><li>Gives the right of exclusive sewing machine selling to local sellers-he charges commission for it </li></ul><ul><li>The first franchise agreement </li></ul><ul><li>Coca-Cola, General Motors, Ford Motors... </li></ul>
  18. 18. 1. Fran chising <ul><li>Product distribution franchising </li></ul><ul><li>Fran chising of the first generation </li></ul><ul><li>Franchisee sells products under producer’s trade mark </li></ul><ul><li>Soft drinks bottleing plant (Coca-Cola), auto part shops (Ford, John Deer), gas stations (Exxon, OMV) </li></ul><ul><li>1/3 of the total retail in the USA has been achieved through this form of franchising </li></ul>
  19. 19. 1. Fran chising <ul><li>Business format franchising </li></ul><ul><li>Today’s most present form of franchising </li></ul><ul><li>Franchisee sells products/services of Franchisor, using its trade mark or service mark and business model which Franchisor developed through its multiannual experience </li></ul><ul><li>Concept which can be taught to someone and applied in other locations </li></ul><ul><li>Most used in the service sector-restaurants, fast food restaurants, business services, maintenance, tourism, hotel industry, real estate ... </li></ul>
  20. 20. 1. Fran chising <ul><li>Unit and multi-unit franchising </li></ul><ul><li>Division made according to the way of franchise networks spreading </li></ul><ul><li>International franchising </li></ul><ul><li>UNIT (DIRE CT ) FRAN CHISING – Franchisee only opens one franchise unit </li></ul><ul><li>MULTI-UNIT FRANCHISING </li></ul><ul><li>a) ( area development franchising ) </li></ul><ul><li>b) General franchise agreement ( master franchising ) </li></ul>
  21. 21. <ul><li>PART II </li></ul><ul><li>FRAN CHISING IN SERBIA </li></ul><ul><li>( business concept for economic and entrepreneurial growth ) </li></ul>
  22. 22. 2. Fran chising in Serbia <ul><li>Dom estic franchise networks </li></ul><ul><li>There are 15-20 domestic franchise networks </li></ul><ul><li>There are no records on the exact number of Franchisors and Franchisees </li></ul><ul><li>3 (t hree ) Franchise associations (Beograd, Novi Sad, Niš) </li></ul><ul><li>The most frequent form of franchising in Serbia-product distribution franchising </li></ul>
  23. 23. 2. Fran chising in Serbia <ul><li>Domestic franchise networks </li></ul>
  24. 24. 2. Fran chising in Serbia <ul><li>Dom estic franchise networks </li></ul>
  25. 25. 2. Fran chising in Serbia <ul><li>Foreign franchise networks </li></ul>
  26. 26. 2. Fran chising in Serbia <ul><li>Foreign franchise networks </li></ul>
  27. 27. 2. Fra nchising in Serbia <ul><li>The first franchise conference </li></ul><ul><li>The first franchise conference in Serbia – April 11 th , 2007 </li></ul><ul><li>Milan Parivodić, Slobodan Milosavljević, Michael Polt, William LeSante (Vice-president of the IFA’s Global Marketing Committee ) </li></ul><ul><li>T opics : basics of franchising , how to buy a franchise, how franchising can help economic growth of Serbia </li></ul><ul><li>Conclusion : fran chising is under developed </li></ul><ul><li>AMCHAM and IFA offer help </li></ul>
  28. 28. 2. Fran chising in Serbia <ul><li>The first franchise conference </li></ul><ul><li>Serbia: Franchising Market – a report: </li></ul><ul><ul><li>The second largest market (after Romania) </li></ul></ul><ul><ul><li>It has a growing consumptive power which needs to be satisfied </li></ul></ul><ul><ul><li>Western products are highly valued </li></ul></ul><ul><ul><li>Laws are created according to the EU laws </li></ul></ul><ul><ul><li>There are no limitations to emerging of American franchises </li></ul></ul>
  29. 29. 2. Fran chising in Serbia <ul><li>Business concept for economic growth of Serbia </li></ul><ul><li>Fran chising is not a guarantee for success </li></ul><ul><li>S erbia has advantages in the fields of agriculture and services (most franchise networks belong to the service sector) </li></ul><ul><li>How franchising can help : </li></ul><ul><ul><li>1) It reduces the unemployment rate </li></ul></ul><ul><ul><li>2) It enables business activities of small businesses conducted by great trade chains </li></ul></ul><ul><ul><li>3) It creates new domestic franchise networks and their expansion in the country and surrounding countries </li></ul></ul>
  30. 30. 2. Fran chising in Serbia <ul><li>Fran chising and unemployment rate reduction </li></ul><ul><li>Unemployment is one of the greatest problems of our economy </li></ul><ul><li>The advantages of franchising – beginners’ mistakes are avoided and no previous experience is needed </li></ul><ul><li>Success of businesses which bought a franchise greater than the success of businesses which started off with their own ideas </li></ul><ul><li>Soci al program for the employed whose work status is soon to be terminated (2002) – fran chising is one of the solutions </li></ul><ul><li>F und for economic growth of Serbia – start-up projects financing </li></ul>
  31. 31. 2. Fran chising in Serbia <ul><li>Small players join big players </li></ul><ul><li>Owners of retail shops are faced with fierce competition (Rodić, Mercator, Delta, Metro...) </li></ul><ul><li>By entering franchise system (for example, DIS, DELTA MAXI/PEKABETA) advantages are gained – unified supplies, discounts, corporate marketing, no incoming costs, survival </li></ul><ul><li>If you can’t beat them, join them </li></ul>
  32. 32. 2. Fra nchising in Serbia <ul><li>N ew franchise networks </li></ul><ul><li>Anyone can name at least 1 domestic business which can expand using advantages of franchising </li></ul><ul><li>Advantage : network expansion in Serbia and the surrounding countries, recognizability and image awareness, employment increase </li></ul>
  33. 33. 2. Fran chising in Serbia <ul><li>What now ? </li></ul><ul><li>Based on the existing examples we see that franchising does exist in Serbia </li></ul><ul><li>There is no law which regulates franchising (it is only mentioned in Competition Law ) </li></ul><ul><li>There is no law which limits creation of new and expansion of the existing franchise networks </li></ul><ul><li>Possible solutions : stronger promotion of franchising ( state promotes it through agencies, banks promotes it through development of financing programs for franchise buying, private initiative ), creation of national association s, Ethical codex </li></ul>
  34. 34. 2. Fran chising in Serbia <ul><li>Something IS happening ... </li></ul><ul><li>The year 2007 is a milestone in franchise development in Serbia : </li></ul><ul><ul><li>The first franchise conference </li></ul></ul><ul><ul><li>Emersion of Internet sites promoting franchising </li></ul></ul><ul><ul><li>Chamber of Commerce of Serbia prepared brochures for franchise promotion, series of training in 2008 </li></ul></ul>
  35. 35. <ul><li>PART III </li></ul><ul><li>RE/MAX </li></ul><ul><li>Mr. Miodrag Kušić, </li></ul><ul><li>Regional Director of RE/MAX Serbia and Montenegro </li></ul>
  36. 36. 3. RE/MAX <ul><li>Case Study </li></ul><ul><li>RE/MAX – leader at the real estate market in the USA, Canada and other most competing markets </li></ul><ul><li>Founded in 1973 </li></ul><ul><li>121 000 agents in 67 countries </li></ul><ul><li>More than 1 million transactions in only one year </li></ul><ul><li>The best in real estate industry </li></ul><ul><li>The fastest growing franchises- 11th place ; The most advantageous franchises-4 th place; The best world franchises-9 th place </li></ul><ul><li>Among “Fifty companies that changed the world” ( a book by Howarda Rothman) </li></ul>

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