2. Franchising Start upFranchising Start up
PackagePackage
Market survey and site selectionMarket survey and site selection
Facility design and layoutFacility design and layout
Financing adviceFinancing advice
Operating ManualsOperating Manuals
Management training progarmsManagement training progarms
Training the franchisee’s employeesTraining the franchisee’s employees
3. Franchising Start upFranchising Start up
PackagePackage
Market survey and site selectionMarket survey and site selection
Facility design and layoutFacility design and layout
Financing adviceFinancing advice
Operating ManualsOperating Manuals
Management training progarmsManagement training progarms
Training the franchisee’s employeesTraining the franchisee’s employees
4. FranchisingFranchising
A privilege or right granted to a personA privilege or right granted to a person
or a group by a government, state oror a group by a government, state or
sovereign. Authorisation granted by asovereign. Authorisation granted by a
manufacturer to a distributor or dealermanufacturer to a distributor or dealer
to sell his products.to sell his products.
Franchising is a method used byFranchising is a method used by
business for the marketing andbusiness for the marketing and
distribution of products and services.distribution of products and services.
5. FranchisingFranchising
The two parties involved are:The two parties involved are:
1. The Franchisor: The Franchisor is the1. The Franchisor: The Franchisor is the
provider of the franchise. Typically he ownsprovider of the franchise. Typically he owns
the trademark/product/service and licensesthe trademark/product/service and licenses
the trademark to another party. He maythe trademark to another party. He may
provide support for the running of theprovide support for the running of the
franchise. In exchange, he receives a fee,franchise. In exchange, he receives a fee,
commonly known as the royalty or franchisecommonly known as the royalty or franchise
fee. This fee varies from industry to industry.fee. This fee varies from industry to industry.
6. FranchisingFranchising
FranchiseeFranchisee
Franchisee is the person who pays forFranchisee is the person who pays for
and purchases a franchise from aand purchases a franchise from a
franchisor and operates a businessfranchisor and operates a business
using the name, product, businessusing the name, product, business
format and other items provided by theformat and other items provided by the
franchisor. The franchisor helps thefranchisor. The franchisor helps the
franchisee in setting up the businessfranchisee in setting up the business
and managing it.and managing it.
7. ROLESROLES
FunctionFunction
1.1. Site selectionSite selection
2.2. DesignDesign
3.3. EmployeesEmployees
4.4. Products to beProducts to be
soldsold
5. Prices5. Prices
6. Advt. &6. Advt. &
FranchisorFranchisor
OverseesOversees
Provides designProvides design
TrainingTraining
DecidesDecides
Sets/RecommendsSets/Recommends
FranchiseeFranchisee
Chooses withChooses with
approvalapproval
Incurs the costIncurs the cost
Hires and paysHires and pays
Can change only withCan change only with
approvalapproval
FollowsFollows
Local requirementsLocal requirements
8. Ongoing BenefitsOngoing Benefits
Field supervision of operationsField supervision of operations
Management ReportsManagement Reports
Merchandising and employee retrainingMerchandising and employee retraining
National advertisingNational advertising
Centralized planningCentralized planning
Market data and guidanceMarket data and guidance
Auditing and record keepingAuditing and record keeping
Group insurance plansGroup insurance plans
9. Advantages ofAdvantages of
FranchisingFranchising
Low RiskLow Risk
-- eliminates the risk of learning from a-- eliminates the risk of learning from a
completely new businesscompletely new business
-- risk of whether the business will be-- risk of whether the business will be
successful or not is much lower for thesuccessful or not is much lower for the
franchisee.franchisee.
10. Advantages ofAdvantages of
FranchisingFranchising
GrowthGrowth
-- A franchise is a part of a network. A huge-- A franchise is a part of a network. A huge
network projects a successful network,network projects a successful network,
which the franchisee can take advantage ofwhich the franchisee can take advantage of
Financial and Operational SupportFinancial and Operational Support
-- Franchisor assists the franchisee in-- Franchisor assists the franchisee in
obtaining finance for setting up theobtaining finance for setting up the
business. Training and consultancy is alsobusiness. Training and consultancy is also
provided on the business and the product.provided on the business and the product.
11. Advantages ofAdvantages of
FranchisingFranchising
AdvertisingAdvertising
-- Advertising costs are also reduced-- Advertising costs are also reduced
and shared by the franchisee.and shared by the franchisee.
Franchisee enjoys a national exposureFranchisee enjoys a national exposure
at an affordable price.at an affordable price.
12. Disadvantages ofDisadvantages of
FranchisingFranchising
Royalty and feesRoyalty and fees
-- Huge amount of money is paid in the-- Huge amount of money is paid in the
form of royalty and fees. Franchisingform of royalty and fees. Franchising
fee is normally paid only at the time offee is normally paid only at the time of
starting or renewing agreement.starting or renewing agreement.
Royalty is recurring cost and is paid atRoyalty is recurring cost and is paid at
a predefinied frequency.a predefinied frequency.
13. Disadvantages ofDisadvantages of
FranchisingFranchising
Lack of ControlLack of Control
-- Franchising requires adherence to the-- Franchising requires adherence to the
stipulated terms and conditions as setstipulated terms and conditions as set
by the Franchisor. Also the franchisorby the Franchisor. Also the franchisor
can terminate the franchisee if thecan terminate the franchisee if the
policies and guidelines prescribed arepolicies and guidelines prescribed are
not observed.not observed.
