Franchising in retailing

• successful method of national / international retail expansion.• Def- continuing relationship in which franchisor provides

licensed privilege to do the business + assistance in organizing, training, merchandising, and management in return for a consideration from the franchisee.

• Roles of franchisor and franchisee.

Function Franchisor franchisee

Site selection

Design

Employees

Products to b sold

Prices

Ad /promotion

Oversees

Provides design

Training

Decides

Sets/recommends

Decides nationally

Chooses with approval

Incurs cost

Hires, supervises, pays

Can change if prior approval

Follows

May suggest local needs

• Evolution- powers to peasant. singer machines and now in 1950 by Raycrok -MacDonald.

• Types- 1-product/trade-name to acquire mfr’s identity to some extent, 2-busines format franchising. License for predetermined financial returns thru complete business package including training ,support of corporate name e.g. restaurants

• May b single unit, or master franchise-for region/country who then sets up unit franchise,

• Advantages- 1-low risk, 2-growth,3-ease of financing and operational supports, 4- reduced ad costs, Disadvantages-1- royalty fees,2- lack of control

• Issues- being a contractual relationship so legal matters. Intellectual property rights on patented products, trade mark or trade names copyrights, consumer conflicts as consumer protection acts, weights and measure acts for packaged commodities, laws related to real estate investments

• Changing consumer lifestyles demands and people can achieve their entrepreneurial dreams. Great way to make it expand even as a national brands.

• Critical success factors like franchisee economics, aggressive unit growth