Beruflich Dokumente
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FRANCHISING
FRANMA
Dorelene Villanueva Dimaunahan, MScM, CFE
Franchising
Franchising is a form of business organization in which a firm that already has a SUCCESSFUL product
or service (FRANCHISOR) licenses its trademark and method of doing business to another business or
individual (FRANCHISEE), in exchange for a franchise fee and ongoing royalty payment
International Franchise Association (IFA): A franchise operation is a contractual relationship between
the franchisor and franchisee in which the franchisor offers or is obliged to maintain a continuing
interest in the business of the franchisee in such areas as know-how and training; wherein the franchisee
operates under a common trade name, format and/or procedure owned or controlled by the franchisor,
and in which the franchisee has or will make a substantial capital investment in his business from his own
resources.
Franchising is MORE than just distributorship because it extends to an ENTIRE operation or method
of dong business, involves greater assistance, control and longer duration, whereas the distributor
merely re-sells products to retailers or customers
Growth of Franchising
The word franchise comes from an old dialect of French and means
privilege or freedom
Singer Sewing Machine - first franchise (mid 19th century)
Automobile - Ford, Petroleum Products - Shell, Softdrinks - Coca
Cola, Food & Restaurants - McDonalds & Starbucks
Home markets became saturated, resulting in attractive opportunities
overseas, paired with the expansion of international trade and media
Lack of regulations in most countries
Types of Franchises
Product & Trademark
Business Format
Management Franchise
An arrangement under which the An arrangement under which the An arrangement under which the
franchisor grants to the franchisee franchisor provides the formula franchisee provides the management
the right to buy its products and use for doing business to the expertise, format and/or procedures
its trade name
Here, the franchisee merely sells
the franchisors products, including
Types of Franchises
Product & Trademark
Business Format
Management
Individual Franchise
Area Franchise
Master Franchise
Disadvantages
Profit-sharing
Managing growth
Cost savings
Legal expenses
Disadvantages
Restrictions on creativity
Duration and nature of commitment
Risk of fraud, misunderstanding, lack of
franchisor commitment
Poor performance on the part of other
franchisees
Potential for failure