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Franchising - Coggle Diagram
Franchising
Definition
Exclusive
rights
materials
standard
product
management system
market share
trademark -> goodwill -> company assent (non-physical)
technology
quality
a business opppotunity
Franchisor (producer or distributor)
grants
exclusive rights to
an individual (franchisee
) for the local distribution and/or sale of the service or product
in return
,
receives a payment or royalty and conformance to quality standards.
Benefits
reduction of capital requirements
increase in management motivation
speed of expand
Drawbacks
increase in operational support cost
reduction in control
sharing in profit
Franchisee
Benefits
Formalized training
financial and managerial assistance
Proven marketing method
Overall low failure rate
Quicker start up time
Drawbacks
Franchise fee
Royalties
Restriction on growth
Renewal/ Termination clause
sole supplier
less independence in operation
Types
Product or Trade name franchise
licenses
its trademark and logo
to the franchisees
not provide
them with
an entire system
for running their business
Ex: soft drink distribution, automobile dealers and gas stations
Cars and car repair parts (GMC, Ford, Exxon, Goodyear Tires)
Large equipment (John Deere Tractor, Caterpillar)
Computers (Dell, Asus, Hewlett Packard)
Appliances (Frigidaire, Kenmore, LG)
Business Format Franchise
use product, goods, service and trade mark use, its business technique
Support
the entire business format
marketing
personal procedure
accounting
selling
inventory
Ex: fast food brand, service, building and construction, restaurants, retail, automotive,lodging
Job franchise
designed to be owned and run by one person or with minimal additional staff
be operated from the franchisee's home or on a mobile basis
Ex: cleaning services, lawn care, a mobile coffee business
In buying the franchise, the franchisee creates a job and an income for themselves
Investment franchise
at the other end of the scale to the job franchise
a large scale operation, requiring significant capital expenditure
franchisee as a corporate investor
ex: Hotel and large restaurant franchise, some retail franchises and gym brands
the franchisee will
not be involved in the business on a day-to-day basis at all
selling to market to go out
Conversion franchise
a modification of standard franchise relationships
. Examples of industries that extensively use conversion franchising are real-estate brokers, florists, professional services companies, home-services, like plumbing, electricians, air conditioning,
systems grow by converting independent businesses in the same industry into franchise units.
3 major components
trademark or logo
royalty fee
marketing plan following