What is franchising? Terms regarding franchising Basic Ingredients of franchising Purpose of franchising Types of franchising Advantage and disadvantage

1. Entrepreneurship Development and Business
Communication
topic- Franchising
Guided By: Dr. Satarupa Modak
Submitted By: Baisakhee Sadangi
180804130088
Sec-B

2. CONTENTS
What is franchising?
Terms regarding franchising
 Basic Ingredients of franchising
Purpose of franchising
Types of franchising
Advantage and disadvantage

3. What is franchising?
• The word ‘franchise’ originates from “french” and
refers to privilege or freedom.
• FASA defines a franchise as a grant by the franchisor to
the franchisee, entitling the latter to the use of a
complete business package containing all the elements
necessary to establish a previously untrained person in
the franchised business and enable him or her to run it
on an on-going basis, according to guidelines supplied,
efficiently and profitably.

4. Some terms regarding FRANCHISING
Franchisor: The licensing company in the franchise
agreement.
Franchisee: The independent owner of a franchise
outlet who enters into an agreement with a franchisor.
Franchise: The right to use specific business name and
sell its goods or services in a specific city, region or
country.

5. Basic ingredients of FRANCHISE:
The description of
franchise system points
out the crucial
ingredients of a franchise
business.

6. Purpose of FRANCHISING:
o To restore individual entrepreneurship.
o To provide an easily recognized and accepted product
or service.
o To compete with big business.
o To allow consumers to buy good quality items or
services at the right price.
o To provide entrepreneurs a means to enter business
with a low capital investment and risk.

7. TYPES OF FRANCHISE:
Three main type of franchise-
1. Product distribution franchise
2. Business format franchise
3. Management franchise

8. Product distributionFRANCHISE
• A market distribution franchise model is very much like a
supplier – dealer relationship.
• The franchise merely sells the franchisor’s products.
However, this type of franchise will also include some
form of integration of the business activities.

9. Business format FRANCHISE
• In a business format franchise, the integration of the
business is more complete.
• The franchisee not only distributes the franchisor’s
product and services under the franchisor’s trade
mark. But also implements the franchisor’s format
and procedure of conducting the business.

10. Management FRANCHISE
In this model, the franchisor
also gives managerial
assistance for the franchise
for conducting the business
other than operational,
financial, and technical
support.

11. Advantages of FRANCHISING
• On-going advice, training, research and development.
• Reduced capital outlay with increased profits.
• Brand awareness.
• Buying power.
• Infrastructure
• Business synergy.
• Increased success rate
• Exit strategy

12. Disadvantagesof FRANCHISING
Services could be expensive or non existent
Contract may protect rights of franchisor only.
Even with support cash flow may still cause the franchise to
fail.
Franchisor do not fulfill initial undertakings
Franchisee may have to forfeit independence
Trade name not as valuable.
Misleading franchise sales practices.

14. Types& arrangementof FRANCHISE
• Franchises are found to be practice under;
*Sales type franchise
* Store type franchise
* Service type franchise

15. Steps in FRANCHISEE requirement-
 Generate enquires
 Set follow up procedures in motion
 Invitation to a meeting
 Enter into concrete negotiations

16. World'sfamous FRANCHISEcompanies: