Teacher Shahed Rahman Franchising System Franchising is a vertical marketing system in which one firm The franchisor provide another individual or firm the franchisee for consideration a license privilege to do business in a specified geographic area along with assistance i ID: 289707
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Slide1
Franchising: An Emerging Global Trends
Teacher –
Shahed
Rahman
Slide2
Franchising System
Franchising is a vertical marketing system in which one firm ( The franchisor) provide another individual or firm ( the franchisee), for consideration, a license privilege to do business in a specified geographic area, along with assistance in organizing training, merchandising, and
managmentSlide3
Consist of Three Relationships
Legal Relationship
The contract between the franchisor or franchisee
The responsibilities and obligationBusiness Relationship
Day to day activities necessary to provide acceptable products and service to customers
Franchisee operates the business under the franchisor’s trade name or marketing plan
Nonbusiness Relationship
Forward looking, cooperative association that exist between two independent channel members
Success is tied directly to the success of other
Interrelated intrinsically to one anotherSlide4Slide5
Franchising System
Franchising Systems consist of network of franchisors and franchisees
With in this system franchisees receives the training, guidance, preparations necessary to use trade secrets, operational procedures.Slide6
Benefits of Franchising
Developing the business with less cost
Independent owner
Rapid market penetration Franchisors do not need to motivate franchisee – as they are the owner of the companyFranchisees get an extensive support from franchisors.
Proven product o service concept
Recognizable brands
Standardized methods for operationsSlide7
Types of Franchising
Tied-house Franchising Systems
First generation franchising
German brewers in the 18th century contracted with tavern to sell their brand of beer exclusively
Product/Trade name Franchising
Second generation appeared during the 19
th
century
Singer sewing machine company elected the sales people to sales its product
Distribute a product under franchisor’s trademark
Business Format Franchising
20
th
Century by A&W
Replicate a complete business concept including product or service. Slide8
Concern of Franchisees
Franchising not always confirm profit
When contract is over the franchisor can pass to another entrepreneur.
Open another store or franchise near your storeIndependence level Some franchisor just do it for market entry
Franchisor collect promotional money from franchiseesSlide9
Concerns of Franchisors
Franchisees who decides to buy supplies or equipments from independent sources.
Effect franchisors profitability
Royalty fees to franchisorsReporting their gross sales honestly Franchisees can hide some of the incident what is bad for the company.
Not following the marketing strategies. Slide10
Relevant Trends in Franchising Environment
Social, Cultural and Demographic Trends
Economic Trends
International Trends Industry Trends Slide11
Internal Environmental Factors
Conflicts in Franchising
Upfront Fees
Tying agreements Capricious TerminationLack of security since franchisors can terminate agreements or fail to renew them at the end of pre specified period
Expiration of the term of the contract
Franchisee bankruptcy
Some default in franchisee’s performance
Encroachment
Lack of Cooperation Slide12
Protect yourself by ….
Self Evaluation
Investing the franchise
Studying the disclosure documentChecking out the disclosure Questioning earning claimsObtaining professional advice
Knowing your legal rightsSlide13
Current Legal Standards in Franchising
Disclosure
FTC Rule 436
Mandatory Purchases from the FranchisorTermination and Renewal Advertising and Promotions
Percentage you have to pay for promotion
Expansion
Franchisor constantly think of expanding into the market that is already being servedSlide14
Making Franchise relationship Work
Strategic Franchise Partnerships
Mutual responsibility
Communicating up and down Franchisees as customers
Leadership and attitude
Creating a climate for open communication
Commitment to mutual goals
Achieve those goals require leadership