Section 1: An Introduction to FranchisingWhat is Franchising?
Franchising has become a driving force to the Canadian economy and economies around the world, offering proven business structures for entrepreneurs to deliver goods and services locally with the strength of national brand names and the processes behind them. A franchise organization combines the drive and ambition of independent business owners with the experience and expertise of a larger company. The result can lead to a rewarding partnership for both participants.
A Basic Understanding of Franchising
It helps to begin with an understanding of what ‘franchising’ really means. In basic terms, franchising is a form of distribution or marketing.
· It is a marketing system for creating an image in the eyes of current and future customers about how the company’s products and/or services can satisfy their needs.
· It is a method of doing business by which the franchisee is granted the right to offer, sell or distribute goods or services under a marketing plan or system prescribed in substantial part by the franchisor.
· It is a strategy for successfully penetrating, developing, dominating and achieving a disproportionately large market share.
The power of franchising is created when the franchisor and franchisees work together as a team with mutual commitment to market share.
What is a Franchise?
A franchise is the agreement or license between two legally independent parties which gives:
· A person or group of people (franchisee) the right to market a product or service using the trademark or trade name of another business (franchisor)
· The franchisee the right to use the product or service using the operating methods of the franchisor
· The franchisee the obligation to pay the franchisor fees for these rights
· The franchisor the obligation to provide rights and support to franchisees
The franchisor is the company that owns and controls the franchise system and grants the license to operate the franchise according to a certain method, and with the products and/or services that have been developed by the franchisor.
The franchisee is the company or person who pays the franchisor for the franchise and the right to use the system.
The franchise is the right to use the trademarks and systems, and to promote the products and/or services.
Types of Franchises
The term “franchise” is used to describe several different types of agreements, although its current definition places the emphasis on the continuing relationship between the franchisor and the franchisee.
There are two main types of franchises:
Product Distribution Business Format
Product Distribution
Early franchises were generally “Trade Name” franchises. The franchisor allowed the franchisee to distribute goods utilizing the franchisor’s trademark. This type of licensing arrangement includes such business as car and truck dealers, soft drink bottlers, home entertainment stores and service stations.
Generally, the franchisee was required to conform to certain standards relating to the quality of the product or service, but apart from that he or she was free to carry on business without any control or guidance from the franchisor.
Although product distribution franchising represents the largest percentage of total retail sales, most franchises available today are business format opportunities.
Business Format
Business format franchising on the other hand not only uses the franchisor’s product, service and trademark, but also provides the complete method for running the business itself, such as the marketing plan and operations manuals.
Need More Detail, Please Click below for free Download
No comments:
Post a Comment