franchising raj

8/2/2019 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.
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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

franchising raj

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