franchising raj
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FRANCHISING
RAJKUMAR PRS
1MBA
MGT 1005429
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FRANCHISE
A form of business where the franchisor sells orprovides to a franchisee:
the right to do business under a particular trade name orbrand
the right to use/sell a proprietary product, process, or
service
training and assistance in setting up the business
a business and marketing plan
economies of scale for purchasing and marketing
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Ctnd
Entrepreneurship for people that are not
particularly entrepreneurial.
regular inspection and quality checks once the
business is establisheda financial (accounting) system
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FRANCHISING ????
Arrangement where one party (the franchiser)grants another party (the franchisee) theright to use its trademark ortrade-name as wellas certain business systems and processes, to
produce and market a good orserviceaccording to certain specifications. Thefranchisee usually pays a one-time franchise feeplus a percentage ofsales revenue as royalty,and gains (1) immediate name recognition, (2)
tried and tested products, (3) detailedtechniques in running and promoting thebusiness, (4) training ofemployees, and (5)ongoing help in promoting and upgrading of theproducts.
http://www.businessdictionary.com/definition/arrangement.htmlhttp://www.businessdictionary.com/definition/party.htmlhttp://www.businessdictionary.com/definition/franchiser.htmlhttp://www.businessdictionary.com/definition/grant.htmlhttp://www.businessdictionary.com/definition/franchisee.htmlhttp://www.investorwords.com/13812/right_to_use.htmlhttp://www.businessdictionary.com/definition/trademark.htmlhttp://www.businessdictionary.com/definition/trade-name.htmlhttp://www.businessdictionary.com/definition/business-system.htmlhttp://www.businessdictionary.com/definition/produce.htmlhttp://www.businessdictionary.com/definition/market.htmlhttp://www.businessdictionary.com/definition/final-good-service.htmlhttp://www.investorwords.com/8751/according_to.htmlhttp://www.businessdictionary.com/definition/specification-spec.htmlhttp://www.businessdictionary.com/definition/pay.htmlhttp://www.businessdictionary.com/definition/franchise-fee.htmlhttp://www.businessdictionary.com/definition/plus.htmlhttp://www.businessdictionary.com/definition/sales-revenue.htmlhttp://www.businessdictionary.com/definition/royalty.htmlhttp://www.businessdictionary.com/definition/gains.htmlhttp://www.businessdictionary.com/definition/recognition.htmlhttp://www.businessdictionary.com/definition/product.htmlhttp://www.businessdictionary.com/definition/detailed.htmlhttp://www.businessdictionary.com/definition/technique.htmlhttp://www.businessdictionary.com/definition/business.htmlhttp://www.businessdictionary.com/definition/training.htmlhttp://www.businessdictionary.com/definition/employee.htmlhttp://www.businessdictionary.com/definition/employee.htmlhttp://www.businessdictionary.com/definition/training.htmlhttp://www.businessdictionary.com/definition/business.htmlhttp://www.businessdictionary.com/definition/technique.htmlhttp://www.businessdictionary.com/definition/detailed.htmlhttp://www.businessdictionary.com/definition/product.htmlhttp://www.businessdictionary.com/definition/recognition.htmlhttp://www.businessdictionary.com/definition/gains.htmlhttp://www.businessdictionary.com/definition/royalty.htmlhttp://www.businessdictionary.com/definition/sales-revenue.htmlhttp://www.businessdictionary.com/definition/plus.htmlhttp://www.businessdictionary.com/definition/franchise-fee.htmlhttp://www.businessdictionary.com/definition/pay.htmlhttp://www.businessdictionary.com/definition/specification-spec.htmlhttp://www.investorwords.com/8751/according_to.htmlhttp://www.businessdictionary.com/definition/final-good-service.htmlhttp://www.businessdictionary.com/definition/market.htmlhttp://www.businessdictionary.com/definition/produce.htmlhttp://www.businessdictionary.com/definition/business-system.htmlhttp://www.businessdictionary.com/definition/trade-name.htmlhttp://www.businessdictionary.com/definition/trademark.htmlhttp://www.investorwords.com/13812/right_to_use.htmlhttp://www.businessdictionary.com/definition/franchisee.htmlhttp://www.businessdictionary.com/definition/grant.htmlhttp://www.businessdictionary.com/definition/franchiser.htmlhttp://www.businessdictionary.com/definition/party.htmlhttp://www.businessdictionary.com/definition/arrangement.html -
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Franchisor
- The party in the franchise contract that specifies themethods to be followed and the terms to be met by the
other party
Franchisee
- An entrepreneur whose power is limited by a
contractual agreement with a franchisor
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TYPES OF FRANCHISE
3 main types of franchiseProduct distribution franchise;
Business format franchise; and
Management franchise
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PRODUCT DISTRIBUTION FRANCHISES
A product distribution franchise model is verymuch like a supplier-dealer relationship.
Typically, the franchisee merely sells the
franchisors products. However, this type offranchise will also include some form ofintegration of the business activities.
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Produces the syrup
concentrate
Sells the syrup
concentrate
FRANCHISEE Produces the finaldrink
Retail Stores
Restaurants &
F&B Outlets
Vending
Machine
Operators
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BUSINESS FORMAT FRANCHISING
In a business format franchise, the integration ofthe business is more complete.
The franchisee not only distributes thefranchisors products and services under thefranchisors trade mark, but also implements thefranchisors format and procedure of conducting
the business.
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outlet in
Sale, Australia
outlet in
Marseille, France
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MANAGEMENT FRANCHISES
A form of service agreement
The franchisee provides the management
expertise, format and/or procedure for
conducting the business.
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FRANCHISOR CONTROLS ON
FRANCHISEES
Restricting of sales territory
Requiring site approval and imposing requirement
on the outlets appearance
Restricting the goods/services that can be sold
Requiring specific
operating hours
Controlling advertising
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FRANCHISING BENEFITS BOTH THE
FRANCHISER & THE FRANCHISEE
Benefits to the Franchiser
The key to rapid growth,
eg: NIIT
Lower capital requirements
Motivation franchisors are owners of the
franchise
Control of locationsRevenue stream franchise fees/royalties
Helps brand building
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Benefits to Franchisee
Benefit of an instant connection with apremium brand
Visibility and standing in the market
Promotion cost are often brone by thefranchiser
Helps get out of margin wars
Systems / software supprot
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THANK YOU
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