LICENSING & FRANCHISING

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LICENSING & FRANCHISING

  1. 1. LICENSING & FRANCHISING Silvia AguilarEduard Morales Mateo Villa
  2. 2. Franchising
  3. 3.  Franchising is a business model in which many different owners share a single brand name. A parent company allows entrepreneurs to use the companys strategies and trademarks; in exchange, the franchisee pays an initial fee and royalties based on revenues. The parent company also provides the franchisee with support, including advertising and training, as part of the franchising agreement. http://www.wikinvest.com/concept/FranchisingDefiniton
  4. 4.  Franchising is a faster, cheaper form of expansion than adding company-owned stores, because it costs the parent company much less when new stores are owned and operated by a third party. On the flip side, potential for revenue growth is more limited because the parent company will only earn a percentage of the earnings from each new store. 70 different industries use the franchising business model. http://www.wikinvest.com/concept/Franchising
  5. 5.  The franchising business model consists of two operating partners: the franchisor, or parent company, and the franchisee, the proprietor that operates one or multiple store locations. Franchising agreements usually require the franchisee to pay an initial fee plus royalties equal to a certain percentage of the stores monthly or yearly sales. Initial fees vary significantly across each industry. http://www.wikinvest.com/concept/FranchisingHow Franchising Works
  6. 6. • Franchisees require less initial capital than independently starting a company and can use proven successful strategies and trademarks.• Franchisees are provided with significant amounts of training, not common to most entrepreneurs.• The franchisor benefits because it can expand rapidly without having to increase its labor force and operating costs, using much less capital.• Franchised stores have a higher margin for the parent company than company-owned stores because of minimal operating expenses in maintaining franchised stores.• http://www.wikinvest.com/concept/FranchisingAdvantages of the Franchising Model
  7. 7. top 10 franchises
  8. 8. Is a form of foreign market entry based on a contractualrelationship, where a company (the licensor) grants rights to intangible property to another company (the licensee) to use in a specified geographic area for a specific period time and the licensee ordinarily pays a royalty to the licensor.LICENSING
  9. 9.  Contractual relationship Licensor Licensee Rights Intangible property Payment (Royalties) Specified geographic area and specific period timeELEMENTS
  10. 10.  Is the relationship that exists between parts to sign a contract, establishing rights and obligationsContractual relationship
  11. 11.  Licensor: Is obliged to furnish technical information and assistance, agrees to make available to another company abroad, use of its patents and trademarks, its manufacturing processes, its trade secrets, and its managerial and technical services Licensee: Is obliged to exploit the rights effectively and to pay compensation to the licensor, agrees to pay the licensor a royalty or other form of payment according to a schedule agreed upon by the two partiesLICENSOR AND LICENSEE
  12. 12. May be exclusive (the licensor can give rights tono other company) or nonexclusive (it can giveaway right)RIGHTS
  13. 13. Include any item of worth that is not physical innature. Patents, inventions, formulas, processes, design s, patterns Copyrights for literary, musical, or artistic compositions Trademarks, trade names, brand names Methods, programs, procedures, systems Manufacturing techniquesINTANGIBLE PROPERTY
  14. 14.  The amount and type of payment for licensing arrangements vary. Each contract tends to be negotiated on its own merits. For example, the value will be greater if potential sales are high.PAYMENT (ROYALTIES)

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