Franchising

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Franchising

  1. 1. FranchisingFranchising Mrs. Jayashree VisputeMrs. Jayashree Vispute
  2. 2. Franchising Start upFranchising Start up PackagePackage  Market survey and site selectionMarket survey and site selection  Facility design and layoutFacility design and layout  Financing adviceFinancing advice  Operating ManualsOperating Manuals  Management training progarmsManagement training progarms  Training the franchisee’s employeesTraining the franchisee’s employees
  3. 3. Franchising Start upFranchising Start up PackagePackage  Market survey and site selectionMarket survey and site selection  Facility design and layoutFacility design and layout  Financing adviceFinancing advice  Operating ManualsOperating Manuals  Management training progarmsManagement training progarms  Training the franchisee’s employeesTraining the franchisee’s employees
  4. 4. FranchisingFranchising  A privilege or right granted to a personA privilege or right granted to a person or a group by a government, state oror a group by a government, state or sovereign. Authorisation granted by asovereign. Authorisation granted by a manufacturer to a distributor or dealermanufacturer to a distributor or dealer to sell his products.to sell his products.  Franchising is a method used byFranchising is a method used by business for the marketing andbusiness for the marketing and distribution of products and services.distribution of products and services.
  5. 5. FranchisingFranchising  The two parties involved are:The two parties involved are: 1. The Franchisor: The Franchisor is the1. The Franchisor: The Franchisor is the provider of the franchise. Typically he ownsprovider of the franchise. Typically he owns the trademark/product/service and licensesthe trademark/product/service and licenses the trademark to another party. He maythe trademark to another party. He may provide support for the running of theprovide support for the running of the franchise. In exchange, he receives a fee,franchise. In exchange, he receives a fee, commonly known as the royalty or franchisecommonly known as the royalty or franchise fee. This fee varies from industry to industry.fee. This fee varies from industry to industry.
  6. 6. FranchisingFranchising  FranchiseeFranchisee Franchisee is the person who pays forFranchisee is the person who pays for and purchases a franchise from aand purchases a franchise from a franchisor and operates a businessfranchisor and operates a business using the name, product, businessusing the name, product, business format and other items provided by theformat and other items provided by the franchisor. The franchisor helps thefranchisor. The franchisor helps the franchisee in setting up the businessfranchisee in setting up the business and managing it.and managing it.
  7. 7. ROLESROLES FunctionFunction 1.1. Site selectionSite selection 2.2. DesignDesign 3.3. EmployeesEmployees 4.4. Products to beProducts to be soldsold 5. Prices5. Prices 6. Advt. &6. Advt. & FranchisorFranchisor OverseesOversees Provides designProvides design TrainingTraining DecidesDecides Sets/RecommendsSets/Recommends FranchiseeFranchisee Chooses withChooses with approvalapproval Incurs the costIncurs the cost Hires and paysHires and pays Can change only withCan change only with approvalapproval FollowsFollows Local requirementsLocal requirements
  8. 8. Ongoing BenefitsOngoing Benefits  Field supervision of operationsField supervision of operations  Management ReportsManagement Reports  Merchandising and employee retrainingMerchandising and employee retraining  National advertisingNational advertising  Centralized planningCentralized planning  Market data and guidanceMarket data and guidance  Auditing and record keepingAuditing and record keeping  Group insurance plansGroup insurance plans
  9. 9. Advantages ofAdvantages of FranchisingFranchising Low RiskLow Risk -- eliminates the risk of learning from a-- eliminates the risk of learning from a completely new businesscompletely new business -- risk of whether the business will be-- risk of whether the business will be successful or not is much lower for thesuccessful or not is much lower for the franchisee.franchisee.
  10. 10. Advantages ofAdvantages of FranchisingFranchising GrowthGrowth -- A franchise is a part of a network. A huge-- A franchise is a part of a network. A huge network projects a successful network,network projects a successful network, which the franchisee can take advantage ofwhich the franchisee can take advantage of Financial and Operational SupportFinancial and Operational Support -- Franchisor assists the franchisee in-- Franchisor assists the franchisee in obtaining finance for setting up theobtaining finance for setting up the business. Training and consultancy is alsobusiness. Training and consultancy is also provided on the business and the product.provided on the business and the product.
  11. 11. Advantages ofAdvantages of FranchisingFranchising AdvertisingAdvertising -- Advertising costs are also reduced-- Advertising costs are also reduced and shared by the franchisee.and shared by the franchisee. Franchisee enjoys a national exposureFranchisee enjoys a national exposure at an affordable price.at an affordable price.
  12. 12. Disadvantages ofDisadvantages of FranchisingFranchising  Royalty and feesRoyalty and fees -- Huge amount of money is paid in the-- Huge amount of money is paid in the form of royalty and fees. Franchisingform of royalty and fees. Franchising fee is normally paid only at the time offee is normally paid only at the time of starting or renewing agreement.starting or renewing agreement. Royalty is recurring cost and is paid atRoyalty is recurring cost and is paid at a predefinied frequency.a predefinied frequency.
  13. 13. Disadvantages ofDisadvantages of FranchisingFranchising Lack of ControlLack of Control -- Franchising requires adherence to the-- Franchising requires adherence to the stipulated terms and conditions as setstipulated terms and conditions as set by the Franchisor. Also the franchisorby the Franchisor. Also the franchisor can terminate the franchisee if thecan terminate the franchisee if the policies and guidelines prescribed arepolicies and guidelines prescribed are not observed.not observed.

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