Franchising

Franchising is defined as a business system in which a company (or a franchisor) sells an individual (or franchisee) the right to operate a business using the franchisor's established system or format. The franchisee is thus able to take advantage of the franchisor's brand names, reputation and experience. As part of the contract (or franchise agreement) the franchisee pays an initial sum of money, known as a franchise (or front end) fee to the franchisor and in addition pays a management services fee which is usually calculated as a percentage of the annual turnover. In certain cases the franchisee may also pay an advertising fee to contribute to franchisor's annual advertising and marketing costs. It is important to realize that the franchisee also has to put up the necessary capital to open the business. If the contract has been agreed, the franchisor provides an operation manual which is a document containing all the information that the franchisee requires in order to manage his or her business. The examples of ftrranchisors, or some big famous companies in cooking fast food are McDonalds, Baskin Robbins; in clothing Benetton, Jacadi; in car manufacturing Ziebait Tidy Car Midas.The amount of rights and duties for franchisee are the following: they can easily get advice on how to deal with specific problems, they also must respect certain rules, they may have to buy supplies from one source, they can only sell certain products, it's not easy to sell the business for them, they should provide regular reports on the level of sales. As for franchisors they do not have to borrow large amounts of capitalto expand, they are in charge of national advertising, they also can develop their business without having to deal with problems. It should be stressed that the trade barriers have almost disappeared over the last few years. France and Britain are the most franchise-developed countries. The most optimistic projections suggest that as much as half of all sales in Europe will come through franchised outlets. Franchising is not only growing, but is expanding and this is seen over the past fifteen years. It's ridiculous to say that franchising has had a much higher success rate than that of the ordinary small business sector. Franchising definitely is a big business. In USA, e.g., half a million people are employed in it. It accounts currently for 30% of all retail sales and reached 50 % by the turn of the century. In the UK their current sales are approximately 4,7 billion per annum and this figure is projected to grow. When expanding franchising in most cases companies need a local partner who knows the market place. Hence the expansion through master licenses of franchising joint ventures is the most preferable method in franchising. Another main point in franchising is local market expertise. It means lower financial returns for the franchisor but the franchise method ensures lower risks.Retailing is the biggest cross-border growth area in franchising. A lot of famous firms, like Mothercare, Marks and Spencer and others are taking the franchise route to Europe. Next come service companies (office cleaning, car tuning, computer technology), e.g., Service master US-based cleaning operator is well established in UK, has moved into Germany from where it is expecting to expand into other countries.To bring franchising to a wider public an increasing number of exhibitions are being held. For example, if you are the franchisor and want some people to operate the business, then you should tell in your manual what to do and what to wear, when to open and close business, what to say to people and what not to say, what to sell and what not to sell and etc. And all of this is defined by you - the franchisor.For the part of franchisees it is important to be positive, outgoing self-starters, able to stick to a job and see it through, - they should be goal orientated. As franchisee you will expect the franchisor team to support you, in return, the franchisor expects you to get on with your part of the deal and develop the business without constant supervision. It's the basis for a successful relationship. This mutual relationship and the fulfillment of both sides carrying out then obligations is the main thing in franchising.

Дата добавления: 2015-08-03