Roll No. 120425720
MBA – I (F)
Franchising refers to the methods of practicing and using another
person's philosophy of business.
The franchisor grants the independent operator the right to distribute
its products, techniques, and trademarks for a percentage of gross
monthly sales and a royalty fee.
Various tangibles and intangibles such as national or international
advertising, training, and other support services are commonly
made available by the franchisor.
Agreements typically last from five to thirty years, with premature
cancellations or terminations of most contracts bearing serious
consequences for franchisees.
The term "franchising" is used to describe business systems which may
or may not fall into the legal definition provided above.
For example, a vending machine operator may receive a franchise for a
particular kind of vending machine, including a trademark and a royalty,
but no method of doing business.
This is called "product franchising" or "trade name franchising".
Franchising dates back to at least the 1850s; Isaac Singer, who
made improvements to an existing model of a sewing machine,
wanted to increase the distribution of his sewing machines.
His effort, though unsuccessful in the long run, was among the
first franchising efforts in the United States.
Franchise Registry concludes that franchising there is continuing
to grow and that franchising is growing in the national economy.
BUSINESSES FOR WHICH FRANCHISING WORKS
Businesses for which franchising is said to work best have the
Businesses with a good track record of profitability.
Businesses built around a unique or unusual concept.
Businesses with broad geographic appeal.
Businesses which are relatively easy to operate.
Businesses which are relatively inexpensive to operate.
Businesses which are easily duplicated.
Limited pool of viable franchisees
In recent years, the idea of franchising has been picked up by the social enterprise
sector, which hopes to simplify and expedite the process of setting up new
A number of business ideas, such as soap making, wholefood retailing, aquarium
maintenance, and hotel operation, have been identified as suitable for adoption by
social firms employing disabled and disadvantaged people.
Event franchising is the duplication of public events in other geographical areas, while
retaining the original brand (logo), mission, concept and format of the event.
As in classic franchising, event franchising is built on precisely copying successful
INTERNATIONAL FRANCHISE ASSOCIATION
The International Franchise Association is the world's oldest and
largest organization representing franchising.
Founded in 1960, it is a Washington, DC based trade group and
non-profit association that represents a growing membership of
more than 1,300 franchise systems, 10,000-plus franchisees and
more than 500 firms that supply goods and services to the industry.
TRADE MARKS IN INTERNATIONAL
PROTECTION OF TRADE MARKS INTERNATIONALLY
One of the first realizations typically made by a franchisor attempting to
expand his activities into other countries is that foreign laws are often
derived from legal traditions and systems different from his own, frequently
resulting in frustrating delays and seemingly incomprehensible restrictions
on planned expansion.
WEAK VERSUS STRONG TRADE MARKS
Generally speaking, the inherent distinctiveness or "strength" of a trade mark
will very much determine whether it is likely to be accepted for registration in
a particular foreign country. Inherently distinctive trade marks are the most
easily cleared for use and registration.
INTERNATIONAL CLASSIFICATION OF GOODS AND SERVICES
It should be borne in mind that most countries adhere to the International
Classification of Goods and Services, which divides all products into thirty-
four classes, with eight additionalclasses reserved for services. An applicant
then selects the class(es) to be included in his application(s) and often must
specify the goods or services of interest in each class
ECONOMIC POTENTIAL OF INTERNATIONAL
FRANCHISING IN EMERGING MARKETS
International franchising has grown significantly since the
1960s because of both push and pull factors.
Domestic saturation, increased competition and diminishing
profits at home have pushed franchisors to examine their
opportunities abroad, while favorable macroeconomic,
demographic and political conditions abroad pulled them
into specific markets.
CURRENT TRENDS AND RESEARCH IN INTERNATIONAL FRANCHISING
As globalization plays an increasingly prominent role in the world economy,
businesses are prudently seeking to expand their operations abroad.
The rise of giant franchisors, such as McDonalds in China, are sending an urgent
signal to large franchise behemoths and newly established franchises alike that
international franchising is here to stay.
CASE OF MCDONALDS AS A FRANCHISEE IN INDIA
McDonald's India is an employer of opportunity, providing quality
employment and long-term careers to the Indian people.
The average McDonald's restaurant employs more than 100 people in 25
different positions – from cashier to restaurant manager.
McDonald's world class-training inputs to its employees can be seen in the
present close to 2000 employees currently in Mumbai and Delhi.
Worlds Oldest McDonald’s
Worlds Oldest McDonald’s
This 44 year-old site is the oldest in the worldwide chain of 20,000
restaurants and the last one with red-and-white striped tile exterior.
After opening in 1953, it immediately became the standard for the fast
food franchises across the country. The building and its 60-foot high
neon sign with "Speedee the Chef" are eligible for listing on the
National Register of Historic Places.
MCDONALD’S IN INDIA
Around the world, McDonald's
traditionally operates with local partners
or local management. In India too,
McDonald's purchases form local
suppliers. McDonald's constructs its
restaurants using local architects,
contractors, labour and - where possible
– local materials.
McDonald's and its international supplier
partners worked together with local
Indian Companies to develop products
that meet McDonald's rigorous quality
International franchises have become one of the fastest-growing
franchise areas as the world recognizes the benefits of franchising
and franchises look to expand globally.
International franchising offers a unique opportunity for
entrepreneurs to tap into the potential of the rapidly expanding