Franchising

2. Group 440 By Aygun Hajiyeva

3. History of Franchising
 The concept of franchising as we know today
1st started in Germany
 In 1851, Singer Sewing Machine Co. began
granting distribution franchises for its sewing
machine. Thus began the modern concept of
franchising

4. The root word “Franchise” comes from old French
meaning privilege/freedom.

5. Franchise system
Franchise Franchisor Franchisee

6.  A Franchise is a license granted by a business
to another business to make and sell goods/
services

7.  A Franchisor is the owner of the business who
grants the license
 A Franchisee is the person who purchases the
business name

8. Types of Franchise
Business
Format
Franchise
Product or
Trade name
Franchise
dealership
Unit
Franchise
Master and
Regional
Franchises

9. Business Format Franchise
 The most popular form of Franchising
 A Franchisor teaches to the franchisee the
entire businesses format
 Allows using trademark
 Advertising
 Fast food restaurants are good examples

10. Product or Trade name Franchise
 Only involves product
 Manufacture grants a franchisee the right to
sell its product but with no method of doing
business
 Allows using trademark

11. Dealership or Distributorship,
Licenses, Agencies
 Allows to sell Franchiser product under their
own trademark
 Own the rights to sell products on behalf of a
supplier

12. Manufacturing and unit Franchise
 One of the lesser-known franchise structures
is called a manufacturer franchise
 The franchisee would only be responsible for
running one unit

13. Master Franchisee
 A Master Franchisee is granted the rights to a
substantial territory, usually a whole country

14. Regional Franchisee
 In a Geographically large area Master
Franchisee may decide to appoint Regional
Franchisee

15. Multiple Franchisee
 Some Franchisees operates not just one unit
but several

16. Advantage of Franchise
 Increase number of outlet with minimum
capital
 Name recognition
 Running small business under Franchise
name is very beneficial
 Big Business help in corporate marketing
 Proper and effective marketing tactic

17. Disadvantage of Franchise
 Frightening Franchise Fees
 Outrageous Royalty Fees
 Bloated Raw Material Cost
 Most Franchises don`t provide financing
 Competition Creep
 A Creative Black Hole
 Complex Procedure