MODERN FRANCHISING BME 4304 UNIVERSITY OF THE EAST.pptx

about modern franchising ue

1. MODERN FRANCHISING

2. Franchising is a well-known marketing strategy for business expansion. A contractual agreement takes place between Franchisor and Franchisee. Franchisor authorizes franchisee to sell their products, goods, services and give rights to use their trademark and brand name. And these franchisee acts like a dealer. Franchising really began to blossom in the post-war 1950s and 1960s. Franchisors of convenience goods and services seemed to be popping up on every corner. Modern Franchising

3. The most common way of franchising is the single-unit franchise. This is where a person or company buys a single unit to operate in the company's name in a specific location. As you expand, you'll have increasing numbers of franchisees operating their businesses in different areas. Form of franchising most common today

4. In the United States, many histories about modern franchising have often cited Albert Singer and the Singer Sewing Machine Company as being the first commercial franchisor, dating franchising to 1851. Famous example of the first franchises

5. Franchising is a popular business model because it offers several benefits for franchisors and franchisees. For franchisors, it allows them to expand their business and increase brand recognition without needing large amounts of capital. Why is franchising becoming popular?

6. The Franchise Business Model. A franchise enables you, the investor or franchisee, to operate a business. You pay a franchise fee and you get a format or system developed by the company (franchisor), the right to use the franchisor's name for a specific number of years and assistance. How does franchising work?

7. Franchising is different It is unique because (1) you're dealing with a concept that has already been tested and proven, (2) that concept comes with instructions (3) there is a third party who has a direct financial, ongoing interest in your success - the franchisor. Unique about franchising

8. TYPES OF FRANCHISING

9. 1. Product distribution franchising- the relationship between the franchisees and franchisors is very much like a standard dealer-supplier relationship. (Example: Coca-cola, General Motors) 2. Business format franchise: This is the most common type of franchise arrangement. In this model, the franchisor allows a third party to do business using their trademarks and business model in exchange for fees and a recurring percentage of sales revenue. In a business format franchise, the franchisor provides a complete, ready-to-operate business package to the franchisee, including trademark, marketing, training, and support. (Example: McDonalds, Starbucks and Subway) There are two common types of franchising in the Philippines

10. A job franchise is a franchise model which is designed to be owned and run by one person - an owner-operator - or with minimal additional staff. It is generally a low-investment opportunity and very often is a franchise which can be operated from the franchisee's home or on a mobile basis. In buying the franchise, the franchisee creates a job and an income for themselves, hence the name. The franchisee will deliver services or sell products to their customer base. (Examples: cleaning services, lawn care) Job Franchise

11. An investment franchise is at the other end of the scale to the job franchise. It is a large scale operation, requiring significant capital expenditure. In most cases the franchisee will not be involved in the business on a day-to-day basis at all, and in all cases the franchise will require a significant professional management team to operate it. The franchisee is likely to be a corporate investor and to have significant commercial experience in the same or similar sector. They may already own other franchises within the same industry. (Example: Hotels. gym brands and large restaurant) Investment Franchise

12. With a distribution franchise, the franchisor grants the franchisee the right to distribute or sell their product or range of products to customers. A distribution franchise differs from other types of franchise because generally the franchisee will operate and sell the franchisor's product under their own identity rather than adopting the franchisor's name and operational systems. (Examples: car dealerships and electrical appliance retailers) Distribution Franchise

13. The business format franchise is the model that will spring to most people’s minds when they think of franchising. Under a business format franchise, the franchisor provides the franchisee with everything needed in order to set up and operate the business, from equipment and premises if required, to training, operational systems, supplier contracts, marketing tools and support and more. The business format franchise covers a broad spectrum, from fast-food restaurants and coffee shops, to business services and personal care. Business Format Franchise

14. Conversion franchise model exists where the franchisee joins the franchisor's network already owning an independent business within the franchisor's industry. The existing entity is converted into a franchise branch. This allows a franchisor to very quickly expand a network, whilst offering the franchisee the benefits of becoming part of a well-known brand with all of the operational and financial plus points of being part of a network with training and support. Conversion franchises are common within the real estate industry, dental and medical clinics and hairdressing. Conversion Franchise

15. The world of franchising is vast and varied across many industries, with different investment ranges, qualifications, and responsibilities that can appeal to just about anyone with an entrepreneurial spirit and a drive to succeed. The franchisor operates around a central structure that grows by incorporating new owners (franchisees) and locations. Franchisees pay the franchisor for use of the brand name, business model, support, and other proprietary elements. The type of franchise you choose to invest in is as much a personal choice as a reflection of your professional aspirations. The structure of the franchise business is typically defined by the number of units offered to a franchisee and the territory development rights included in the franchising contract, which is a legally binding agreement between franchisors and franchisees. Franchising Basics

16. In a single-unit franchise agreement, the franchisee is granted rights to open and operate a single franchise unit within a brand. This type of arrangement is the simplest and most common and is particularly appealing to first-time franchise owners as they ease into the world of franchising. Over time, if the franchisee and franchisor relationship is proving to be mutually beneficial, they may choose to expand their contract to include more locations. Single-unit franchise ownership may often be appealing to those operating a business in the same industry and wanting to convert to the existing franchise brand, allowing them to quickly boost the business and gain many other benefits in the process. Single-Unit Franchise

17. In most types of franchises, a multi-unit franchise agreement grants a franchisee the right to open and operate multiple franchise units. This type of arrangement may have specific territorial parameters, protections, and development schedules. For example, a franchisee may be required to adhere to an agreed upon schedule for developing a certain number of units within a specific time frame. If the franchisee fails to meet the deadlines, the franchisor may have to right to terminate a contract or pursue development with other interested parties. Multi-unit franchising has become a popular investment tactic in recent years. Through the combination of financial incentives and opportunities for compounded financial gain, franchisors are attracting entrepreneurs who want to strengthen their portfolios within proven franchise systems that offer long-term growth. Owning multiple franchises can be a strong wealth-building strategy, since diversification of your investment means you won’t have to rely heavily on one location for primary income. Economies of scale can be found in inventory buying, marketing, advertising, staffing, and training and are more likely to work in your favor if you’re considering multiple-unit franchising. Given all the cost savings and reduced expenses, multi-unit franchise ownership often means higher ROIs and greater financial success with the backing of a proven brand Multi-Unit Franchise

18. Similar to a multi-unit agreement, an area development franchise agreement grants the franchisee rights to open and operate multiple units during a specified time period. The difference is that area development franchisees are granted exclusive development rights within a particular territory, precluding other operators from opening units in that area unless they’ve recruited those operators to do so. Area Development Franchise

19. Master franchise agreements give franchisees even more rights and capabilities than area development agreements. Beyond the contracted obligation to open a certain number of units within a defined territory, which is often another country, master franchisees act as sub-franchisors, introducing the brand and upholding its standards in a new region. They also gain the right to sell franchise units within their area to other franchisees. Master franchisees are similar to franchisors, except on a more limited scale. Many of the responsibilities are the same, including providing training and ongoing support, and they also collect their offshoots’ franchise fees and royalties directly. Master franchise agreements are often a strategy that younger franchises employ to help with rapid growth of the franchise system. Master Franchise

20. Franchising offers a fantastic and diverse range of opportunities to an aspiring business owner, but the wide spectrum can seem overwhelming. Having an understanding of the difference between the types of franchises on offer will assist a would-be franchisee in narrowing down their options in order to choose the model that best suits their individual needs and their goals. Conclusion:

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