Franchising
Franchising is basically a marketing technique. Franchise relations' is the term used to describe the relationship between a franchisor and its franchisees. Typically, positive franchise relations indicate a favorable relationship between a franchisor and its franchisees, while the opposite is true of negative franchise relations. On the other hand, franchise is as a business arrangement, in which knowledge, expertise and often a trademark or trade names are licensed to an operator.
Franchising has several important features:
? It is a marketing technique
? It involves a contract for a fixed period
? The franchisor grants a right to market its product or service and use its business name, trade name, business format and systems.
? The franchisee pay a fee and receives management support and marketing effort, and
? The cost of the franchise is an initial royalty and, usually, a subsequent royalty payment based on a percentage of sales.
There are 4 types of franchises:
? Single-unit franchise
? In-store franchise
? Conversion franchise
Advantages of franchising:
? For the franchisee
1. Reduced risk of failure: it is the most important point, and through the studies, it can increase in success rates.
2. Overcoming limited experience: franchisees can become self-employed in business with limited experience; they can get the added benefits of having access to a franchisor’s experience.
3. Proven market position: the benefit is to get a proven products and services and a well developed business concept which was take years to develop and also ca ...