Group 440 By Aygun Hajiyeva

History of Franchising

The concept of franchising as we know today 1st started in Germany

In 1851, Singer Sewing Machine Co. began granting distribution franchises for its sewing machine. Thus began the modern concept of franchising

The root word “Franchise” comes from old French meaning privilege/freedom.

Franchise system

Franchise Franchisor Franchisee

A Franchise is a license granted by a business to another business to make and sell goods/ services

A Franchisor is the owner of the business who grants the license

A Franchisee is the person who purchases the business name

Types of Franchise

Business Format

Franchise

Product or Trade name

Franchise

dealership

Unit Franchise

Master and Regional

Franchises

Business Format Franchise

The most popular form of Franchising A Franchisor teaches to the franchisee

the entire businesses format Allows using trademark Advertising Fast food restaurants are good examples

Product or Trade name Franchise

Only involves product Manufacture grants a franchisee the

right to sell its product but with no method of doing business

Allows using trademark

Dealership or Distributorship, Licenses, Agencies

Allows to sell Franchiser product under their own trademark

Own the rights to sell products on behalf of a supplier

Manufacturing and unit Franchise

One of the lesser-known franchise structures is called a manufacturer franchise

The franchisee would only be responsible for running one unit

Master Franchisee

A Master Franchisee is granted the rights to a substantial territory, usually a whole country

Regional Franchisee

In a Geographically large area Master Franchisee may decide to appoint Regional Franchisee

Multiple Franchisee

Some Franchisees operates not just one unit but several

Advantage of Franchise

Increase number of outlet with minimum capital

Name recognition Running small business under Franchise

name is very beneficial Big Business help in corporate marketing Proper and effective marketing tactic

Disadvantage of Franchise

Frightening Franchise Fees Outrageous Royalty Fees Bloated Raw Material Cost Most Franchises don`t provide financing Competition Creep A Creative Black Hole Complex Procedure