The document discusses franchising, including definitions of key terms like franchisor and franchisee. It outlines advantages such as lower capital requirements for franchisors and motivated local management. Disadvantages include high costs and less control over franchisee-owned locations. The document also describes the major types of franchises and provides examples of the largest franchise chains in terms of locations.

1. FRANCHISIN
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SUBMITTED BY ;
VIBHORE JAIN

2. INTRODUCTION
 FRANCHISING is a method for expanding
businesses and distributing products and services.
It is based on a relationship between the brand
owner (franchisor) and the local operator.
 The FRANCHISOR is the company that is
franchising its business.
 The FRANCHISEE is the person who buys the
franchise rights from the franchisor.

3.  A FRANCHISE is the agreement between two
legally independent parties which gives a person
(franchisee) the right to trade in a designated area
under the trademark of franchisor.

4. ADVANTAGES
 CAPITAL
The franchisor’s capital requirements will be lower because
the franchisees provide the capital to open each franchised
outlet.
 MOTIVATED AND EFFECTIVE MANAGEMENT
The local management of each franchised unit will be
highly motivated and very effective. They treat the franchise
units as their own and that will usually lead to higher sales
and profit levels.
 FEWER EMPLOYEES
The number of employees which a franchisor needs to
operate a franchise network is much smaller than they
would need to run a network of company owned units.

5.  SPEED OF GROWTH
The franchise network can grow as fast as the
franchisor can develop its infrastructure to recruit,
train and support its franchisees.
 INTERNATIONAL EXPANSION
International expansion is easier and faster, since
the franchisee understand the local market
knowledge.
 ADVERTISING AND PROMOTION
Franchisor will reach the target customer more
effectively through co-operative advertising and
promotion initiatives

6. DISADVANTAGES
 HIGH COST
Costs may be higher than you expect. As well as the
initial costs of buying the franchise, you pay continuing
management service fees and you may have to agree to
buy products from the franchisor.
 LARGE LEGAL RESTRICTIONS
The franchise agreement usually includes restrictions on
how you can run the business. You might not be able to
make changes to suit your local market.

7.  Less Control
Compared to business expansion where you own every
location, when you franchise your business , you are
giving up some control to your franchisees who will own
and operate their franchised locations.
 Requires Time
Building up a franchise system takes time and requires
time. The success of your first number of franchisees
will determine the growth and trajectory of your new
franchise system.

8. TYPES OF FRANCHISES
There are many types of franchises ,The five major types of
franchises are:
 JOB FRANCHISE
This is a home-based or low investment franchise that is taken by a
person who wants to start and run a small franchised business
alone. Franchisee usually has to purchase minimal equipment,
limited stock and sometimes a vehicle. A wide and diverse range of
services fall into this group, like travel agency, coffee van, domestic
lawn care service, plumbing, etc.
 PRODUCT (OR DISTRIBUTION) FRANCHISE
Product-driven franchises are based on supplier - dealer
relationships, where franchisee distributes the franchisor’s
products. The franchisor licenses its trademark but usually does not
provide franchisees an entire system for running their business.
Product franchises deal mainly with large products, such as cars
and car repair parts, vending machines, computers, bicycles,
appliances, etc.

9.  BUSINESS FORMAT FRANCHISE –
The business format franchisee also gets to use the franchisor’s
trademark, but more importantly, it gets the entire system to operate the
business and market the product and/or service. The franchisor offers a
detailed plan and procedures on almost every aspect of the business,
provides initial and ongoing training and support.
 INVESTMENT FRANCHISE –
Typically, these are large scale projects which require a large capital
investment, such as hotels and the larger restaurants. The franchisees
usually invest money and engage either their own management team or
franchisor to operate the business and produce a return on their
investment and capital gain on exit.

10.  CONVERSION FRANCHISE
Conversion franchising is a modification of standard
franchise relationships. Many franchise systems grow by
converting independent businesses in the same industry into
franchise units. The franchisees adopt trademarks, marketing
and advertising programs, training system and critical client
service standards. They also usually increase procurement
savings.

11. Largest franchised chain
The following U.S. listing tabulates the early 2010 ranking of
major franchises along with the number of sub-franchisees
(or partners) from data available for 2004.The United States
is a leader in franchising, a position it has held since the
1930s when it used the approach for fast-food restaurants,
food inns and, slightly later, motels at the time of the . As of
2005, there were 909,253 established franchised
businesses, generating $880.9 billion of output and
accounting for 8.1 percent of all private, non-farm jobs. This
amounts to 11 million jobs, and 4.4 percent of all private
sector output

12.  Subway (sandwiches and salads) | startup costs $84,300
– $258,300 (41,916 locations worldwide in 2015).
 2. McDonald's | startup costs in 2010, $995,900 –
$1,842,700 (36,368 locations in 2015)
 3. 7-Eleven Inc. (convenience stores) | startup costs in
2010 $40,500- $775,300, (56,439 locations in 2015)
 4. Hampton Inns & Suites (midprice hotels) | startup
costs in 2010 $3,716,000 – $15,148,800
 5. Great Clips (hair salons) | startup costs in 2010
$109,000 – $203,000 (3,694 locations in 2015)
 6. H&R Block (tax preparation and now e-filing) | startup
costs $26,427 – $84,094 (10,800 locations in 2015)
 7. Dunkin' Donuts | startup costs i in 2010 $537,750 –
$1,765,300