FRANCHISING…….: BY: RANJEET KUMAR VIJAY KUMAR RAHUL SHARMA DIVYAROOP HARSHWAL VAIBHAV JAIN FRANCHISING……. DEFINITION……..: DEFINITION…….. A form of business organization in which a firm which already has a successful product or service (the franchisor) enters into a continuing contractual relationship with other businesses (franchisees) operating under the franchisor's trade name and usually with the franchisor's guidance , in exchange for a fee . THE FRANCHISING RELATIONSHIP…...: THE FRANCHISING RELATIONSHIP…... SITE SELECTION ELEMENTS FRANCHISER FRANCHISEE SITE SELECTION OVERSEES AND APPROVES;MAY CHOOSE SITE CHOOSES SITE WITH FRANCHISER’S APPROVAL EMPLOYEES MAKES GENERAL RECOMMENDATIONS AND TRAINING SUGGESTIONS HIRES,MANAGES AND FIRES EMPLOYEES PRODUCTS AND SERVICES DETERMINES PRODUCT OR SERVICE LINE MODIFIES ONLY WITH FRANCHISER’S APPROVAL PRICES CAN ONLY RECOMMEND PRICES SETS FINAL PRICES FRANCHISING IN INDIA……….:
There are approximately 1150 national and
format franchise systems in India The growth rate in franchised units from 2006-07 to 2009-10 was 30 to 35 per cent for the last 4-5 years. Some 500000 persons are employed in business format franchise organizations. Franchising contributed less than 3 per cent to India’s Gross Domestic Product (GDP) in 2007. FRANCHISING IN INDIA……….
TYPES OF FRANCHISING……: TYPES OF FRANCHISING…… TRADE/PRODUCT NAME FRANCHISING: IN THIS THE FRANCHISER LICENSING A FRANCHISEE TO SELL SPECIFIC PRODUCTS UNDER THE FRANCHISER’S BRAND NAME AND TRADEMARK THROUGH A SELECTIVE,LIMITED DISTRIBUTION NETWORK. THIS METHOD ALLOW FRANCHISEES TO AAQUIRE SOME OF THE PARENT COMPANY’S IDENTITY SOME EXAMPLES…….: SOME EXAMPLES……. PowerPoint Presentation: PURE FRANCHISING OR BUSINESS FORMAT FRANCHISING: IT INVOLVES PROVIDING THE FRANCHISEE WITH A COMPLETE BUSINESS FORMAT.THEY ARE: LICENCE FOR A TRADE NAME THE PRODUCTS OR SERVICES TO BE SOLD THE PHYSICAL PLANT QUALITY CONTROL PROCESS A MARKETING PLAN SOME EXAMPLES……: SOME EXAMPLES…… Benefits of Buying a Franchise: Management training and Support - franchisers offer managerial training programs, counseling services Brand Name Appeal - franchisee purchases the right to use a natioanally known and advertised brand name for a product or service Benefits of Buying a Franchise PowerPoint Presentation: 3) Standardized Quality of Goods and Services - quality of goods or services sold determines franchisers reputation National Advertising Programs - advertising campaigns are organized and controlled by the franchiser PowerPoint Presentation: 5) Fianancial Assistance - support the prospective franchisees 6) Proven Products and Business Formats - franchise owner don’t have to build business from scratch 7) Centralized Buying Power - participation in the franchiser’s cenralized and large-volume buying power PowerPoint Presentation: 8) Site Selection and Territorial Protection - location is critical to success PowerPoint Presentation: DRAWBACKS OF BUYING A FRANCHISE Contract term & renewal: Contract term & renewal Franchise contracts are always written in favor of the franchiser. Franchisees also should understand the term and conditions under which they may renew their franchise contracts at the expiration of the original agreement. In the most cases, franchisees are require to pay a renewal fee and to repair any deficiencies in their outlets or to modernize and upgrade them. Unsatisfactory training programs: Unsatisfactory training programs Before signing on with a franchise, it is wise to find out the details of the training program the franchiser provides to avoid unpleasant surprises. Market saturation: Market saturation Franchisees in fast-growing systems reap the benefits of the franchiser`s aggressive growth strategy: market saturation. Franchise growing that rapidly runs the risk of having outlets so close together that they cannibalize sales from one another. Less freedom: Less freedom When franchisees sign a contract, they agree to sell the franchiser`s product or service by following its prescribed formula. This feature of franchising is the source of the system`s success, but it also gives many franchisees the feeling that they are reporting to a “boss.” Highly independent, ”go-my-own-way” entrepreneurs often are frustrated with the basic “go-by-the- rules” philosophy of franchising. Contd….: Contd …. Loss of independence High initial fees High royalties and advertising allowances Contractual restrictions Inapplicable advertising Termination clauses Not receiving promised help Unsuitable products Lack of competitive advantage conclusion: conclusion Whether we have to buy the franchise or not? Whether franchise business is always beneficial? Need to understand the tool 4 A’S concept Affordability,Acceptability,Awarness,Availability