In this presentation, we will help you understand about franchising, history, types, various advantages and disadvantages of franchising. To know more about Welingkar School’s Distance Learning Program and courses offered, visit: http://www.welingkaronline.org/distance-learning/online-mba.html

1. Franchising
Chapter1

2. Objectives
• Understand definition & concept of franchising .
• Types of franchising .
• Benefits & pitfalls of franchising .
2

3. Introduction
• Mr. Menon an NRI ,was very happy to return to India .
• He was amazed to see changes in Indian economy
• What one noticed is that all these companies have
expanded gradually & made their presence by franchising
3

4. History of Franchising
• The earliest signs of franchising in the united states dates
back to 1850’sjust after Isaac Singer invested Sewing
machine.
• The problem was lack of capital for manufacturing the
machine.
4

5. History of Franchising
• Singers idea got noticed and over the next several
decades many other companies began to copy and
enhance the business model franchising.
• Later Companies such as McDonald’s and Burger king
took franchising to a whole new level.
5

6. History of Franchising
• Franchisor is the entity or person owning to the rights or
license of the business.
• Authorization granted by a manufacture to a distributor
or dealer to sell his products.
6

7. Definition of Franchisee
• An individual or a company who purchases and runs a
franchise.
• Franchisee is the party in franchising agreement that is
purchasing the rights to use business trademarks,
associated marks & other proprietary knowledge in order
to open branch.
7

8. Definition of Franchisor
• An individual or a company owning rights or license of
business.
• Franchisor is a person who grants the license or
permission to various franchisees
8

9. Definition of Franchisor
Franchisor Franchisee
Site Selection Oversees, may choose Chooses with approval
Design Provides Prototype Implements design
Design
Menu Set by Franchisor Changed only by approval
prices Recommendations Decides actual prices
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10. Franchising in India
• India with its huge market and growing demand in all
sectors of the economy is extremely attractive
proposition for entry of foreign brands through
franchising route.
• In the 1990 the market opened foreign franchise.
10

11. Franchising in India
• The key attractions for this franchising is.
• Lower capital requirement
• Laws
• Language
• Huge Market
11

12. Franchising in India
• Franchising is in early stages in India ,and has become
increasingly popular as a means of doing business.
• As a result the Franchising Association of India was set
up Mumbai in the year 2000.
12

13. Franchising in India
Early Entry of Foreign players.
• International soft drinks and hotel Franchisor arrived in
India.
• Marks & Sponsors
• Pepe Jeans & Adams
• Baskin Robbins
• Pizza Hut
13

14. Franchising in India
Indian companies adapting the Franchise Model.
• Franchising become very popular method of doing
business in India
• This has case in IT education e.g.
• SGL
• NIIT
• Aptech
14

15. Franchising in India
• It took some time for international franchise to become
acceptable because of certain attitudes of Indian Business.
• If the brand name is very well known worldwide and the
product is marketable in India.
15

16. Franchising in India
• Lower the price ,product or services can be sold at , the
more customers they are likely to have.
• It is not difficult to spot malls
• India offers lots of potential for franchising community.
16

17. Franchising in India
• In many instances the product sold by the franchisee
outlets may have to be significantly tailored to local taste.
• Foreign Franchisor to be needs aware of local culture
and customs.
17

18. Types of Franchise
• Business format
• Product or trade name
• Dealership
• Master Franchise
• Unit Franchise
• Regional Franchise
18

19. Business Format Franchise
• Business Format Franchise is the most popular form of
Franchising.
• Agreements under this Franchisor offer are:
• Use trademark
• Advertising
19

20. Product or trade name Franchise
• Product Franchise or Trade Franchise0nly involves
product.
• Agreements under this Franchisor offer are:
• Allows Using trademark
• The manufacture grants a Franchise the authority to
distribute goods
20

21. Dealership or Distributorship ,Licenses,
Agencies
• Dealership and distribution ship Format Franchise is the
also most popular form of Franchising.
• Allow to sell Franchiser product under their own
trademark.
• Agencies Format Franchise Own the rights to sell
products on behalf of a supplier.
21

22. Manufacturing & Unit Franchise
• Manufacturing Franchise provide an organization with
the right to manufacture
• Examples include Coca Cola.
• Unit Franchise is granted the right to operate one unit.
22

23. Master Franchisee
A Master Franchisee is granted the rights to a substantial
territory, usually a whole country.
• This a structure adopted by many Franchisee.
Franchisor
Master
Franchisee
Unit Franchise Unit Franchise
23

24. Regional Franchisee
In a Geographically large area Master Franchisee may
decide to appoint Regional Franchisee
Franchisor
Regional Regional
Franchisee Franchisee
Unit Unit Unit Unit
Franchise Franchise Franchise Franchise
24

25. Multiple Franchisee
Some Franchisees operates not just one unit but several.
•
Franchisor
Unit Franchise
25

26. Developers
Large corporations sometimes prefer to exploit their
territory by opening outlets themselves.
•
Franchisor
Developers
26

27. Advantage of Franchise
• Increase number of outlet with minimum capital
• Name recognition
• Running small business under Franchise name is very
beneficial
•
27

28. Advantage of Franchise
• Big Business help in corporate marketing.
• Proper & effective marketing tactic.
• Training & Management facilities
28

29. Disadvantage of Franchise
• It has to control and coordinate a network of semi
independent businessmen.
• Indulgence of big business into small business.
• Safe guarding the interest of both the parties are
complex.
29

30. Disadvantage of Franchise
• Much time is required while selecting a Franchise
• Complex procedure
30

31. Summary
• Franchisee is the party in franchising agreement that is
purchasing the rights to use business trademarks,
associated marks & other proprietary knowledge in order
to open branch.
• Franchisor is an individual or a company owning rights or
license of business.
• Franchisor is a person who grants the license or
permission to various franchisees
•
31

32. Summary
Types of Franchise
• Business format
• Product or trade name
• Dealership
• Master Franchise
• Unit Franchise
• Regional Franchise
32

33. Summary
The main advantage of franchising
• Increase number of outlet with minimum capital
• Name recognition
• Running small business under Franchise name is very
beneficial
However disadvantage
• Much time is required while selecting a Franchise
• Complex procedure
33

34. Franchising
End of Chapter1

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