3. A method of marketing and distributing based on a two parties relationship - the
franchisor (the owner and granter of right) and the franchisee (the recipient of
right).
The right granted is for the purpose of running the business by using the trade
mark or trade name based on a specific system, at specified location or area and
within a specified period of time.
Malaysia Franchise Act 1998 - aims at creating a systematic registration system to
oversee a well-managed and healthy growth of franchise business in the country

4.  Buying a name/reputation
 Established markets
 Technical/management assistance
 Standardized procedures
 Quality standards
 Selection of location
 Facility design
 Quicker cash flow

5.  Loss of independence
 High initial fees
 High royalties and advertising allowances
 Contractual restrictions
 Inapplicable advertising
 Termination clauses
 Not receiving promised help
 Unsuitable products
 Lack of competitive advantage

6. Three types of popular franchise system. They are
 Trade Mark/ Trade name Franchise
 Product Distribution Franchise
 Business Format Franchise

7. Closely resembles licensing whereby the franchisor gives the franchisee the right
to manufacture products by using the brand name, trade name, trade
mark, logo, caricature and others owned by the franchisor for each area.
The approach of this type of franchise does not require a complete
system, however the franchisee needs to be supervised in order to ensure the
quality and good name of the brand is preserved.

8. The franchisor gives the franchisee the right to sell and distribute products
produced by the franchisor.
Franchisor provides guides and training to the franchisees on how to manage the
product distribution.
Development of its operating system is not so comprehensive.
Popular among automotive industries such as Edaran Otomobil Nasioanl Berhad
(EON) and some chains of petrol stations such as Petronas, Shell, Mobil, etc.

9. Most comprehensive and popular type of franchise system.
Franchisees are given the right to use the brand name, distribute the franchisor’s
manufactured goods, and the right to duplicate the whole business system as
practiced by the franchisor.
In business format franchise, the franchisor is responsible to prepare the
franchisee beginning with the concept development and selecting the location, up
to the operation manual, training, accounting system, advertising and
promotion, and continuous business development assistance.

11.  The results of economic crisis of 2008 are distinguishable for the Ukrainian
franchise market:
- Entrepreneurs started analyzing the effectiveness of investing and as a result
they became much more interested in buying franchises.
- Many companies failed, because they were offering franchises with models that
are not able to survive in economically unstable conditions (or management could
not manage such models).
- Some companies have even stopped their activities.
 However, the areas of franchising have expanded since 2008. Companies which
are working in franchise market cover 15 areas such as retail trade, catering, gas
stations, production.
 The experts of federation of franchising, hospitality and infrastructure of Ukraine
say that there is a still big number of promising industries, there are still many
areas that will run on a franchise in the future. Indeed, the level of competition is
very low in these areas today, although they are profitable and just started
developing in Ukraine. These areas are agriculture, delivery, real estate
transactions, sale of goods that were in use, design and architecture, distribution,
automobile, purchase, storage, communication, realization of electrical
equipment, Internet access services, landscape design, production and sale of low
alcohol and alcohol-free drinks, service, accounting and auditing, rent, health,
security services, travel services, repair services, animals caring, sports, chemical
industry, laboratory services, photo services and Legal services.
 So, 27 areas have their investors, but they do not have franchisees to promote
these types of businesses. That is why the franchise is very promising direction
for doing business in Ukraine and experts expect that the number of franchisees
will increase in the future.

12.  Franchising has many advantages that can reduce operating costs and increase efficiency
of production activities, which is especially important for Ukraine
nowadays. However, the Ukrainian franchise market has a number of problems to be
solved. They are as follows:
1. Ukrainian entrepreneurs are unaware of the basic principles of franchising business.
2. The regulations do not meet the content of franchising and business.
3. Franchisees are unprotected (especially Ukrainian franchisees, which have franchise
agreements with foreign franchisees).
4. Lack of information about franchising as a method of doing business.
5. Lack of business testing practice.
 Franchises at the Ukrainian market become more various every day because new
industries and technologies appear. A price range also enlarges: franchisee can choose
from cheap franchises of domestic services or rental to expensive franchises of
fashionable restaurants and production.
 Most Ukrainian franchise systems are concentrated in the capital and only small percent
of franchises are by birth from large regional centers. In addition, most of franchise
units are situated in the biggest Ukrainian cities, such as
Kharkov, Dnepropetrovsk, Donetsk, Odessa and Lviv. But, many cities are not yet
acquainted with franchising. There is a tendency of glutting the cities and companies
redirect in openings of franchise units also in smaller cities.
 A crisis amended plans of development of the most franchise systems, majority of
franchisee are operating in regions, where there is rather difficult economic situation
now. However, the periodic openings of other franchisers refute of this tendency. The
most popular franchises in Ukraine nowadays are those, which need up to 10,000 USD –
15, 000 USD for opening, such as fast-food, vending, and tourism.

13. Area Number of Number of Number of Number of Number of
branches brands franchisees outlets franchised outlets
Trade 34 1021 179 29032 13303
Consumers 22 313 75 5880 2263
services
Catering 14 252 50 2929 1760
Information 7 47 8 385 128
Business 7 84 21 2535 2116
services
Production 6 37 12 558 389
Vending 5 17 11 6200 1195
Finances 4 14 3 638 93
Total 99 1782 359 48157 21247

15.  Franchising should be considered as a tool of world globalization. Since
globalization is a process of global economic, political and cultural integration and
unification, Ukraine, in this sense is interesting and promising market for foreign
franchises output and development of global brands. Here are some factors
responsible for this attraction.
 First, the number of Ukraine's population, geographical location and the possibility
of further expansion through Ukraine into the CIS countries.
 Secondly, the increasing market demand, especially fast food and service markets.
A striking example of standardized services is a growing number of language
schools, services for comprehensive child development, tourism and other services.
The striking example of catering market is development of pizzerias and fast food.
 Third, the availability of financial resources for potential franchisees to open their
business through the purchase of a franchise. The so-called "entry barrier", or the
amount required for investment in the average franchise is from 50 000 U.S.
dollars.
 Fourth, we are mentally close to the European Coulter, and we can develop almost
anything that is already tested in Europe or in the United States.

16.  In Ukraine, there are already many different foreign franchises, their number could
be higher, but many foreign franchisors are eyeing to our terms of business
vision, there is no secret that they are still very different from European
standards, starting from the registration of its business to all kinds of checks
government agencies. Currently, many local businessmen are negotiating the
purchase of promoted and popular franchises in the world, since they already have
positive experience in the local market and need to diversify its business. Buying a
franchise of hyped foreign business, they save time and money to create a
"bicycle". Local franchisors once spent a lot of time and money by creating and
developing your brand, and when they began to develop a network, faced with the
competition of foreign franchises.


17.  Ukrainian franchisor, sooner or later have to think about foreign markets, as the
globalization of the world will not pass by the CIS countries, and hence the local
franchisors will compete with foreign, albeit in its territory, but with global budgets
and approaches, in which the different markets is already their recipes.

18.  For example in Ukraine is an annual International franchising forum FHI Ukraine
(Franchising Hospitality Infrastructure in Ukraine) which aims to share experiences
on the development of franchise systems, matchmaking, networking, as in the
Ukrainian market of franchising, as well as with international organizations
working in the field of franchising . Also in Ukraine, exhibitions and round
tables, there are publications and websites about franchising, franchise directories
available, work consulting and brokerage companies that are foreign franchises in
Ukraine.

19.  Franchising market in Ukraine continue to updating with new offers, and what is
more obvious with new brands. At the beginning of next month in Kiev will be
opened fast food restourant Kentucky Fried Chicken.
 Among famous brands that either are negotiating with partners in Ukraine, either
are looking for partners are Papa John's, Pop-A-Lock, Radio
Shack, Subway, Bennigan's, Hard Rock Café, Carl's Jr., Denny's, 'Dairy Queen, 7
camicie , Rosa Clara, Pizza Hut and many more.
 Moreover, we would like to draw attention to the Telepizza (pizza) and Pressto (dry
cleaning) brands. These are a very well-known networks in Spain. These brands are
now estimated to enter the market of Ukraine, their representatives are planning to
hold a series of meetings in Kiev at the end of October.