Franchising

It is a contractual and legally binding

agreement between a franchiser and a
franchisee.
A franchiser may be the owner of a
trademark or a trade name or producer
of a goods or a service provider.
 Cont…
Franchiser gives the right to the
Franchisee to do business using his
trademark or a trade name or
product or a service.
While giving franchising ,following
point should be consider
Establish their brand in the market.
Creditworthiness of the franchisee.
Prior experience of the franchisee.
Market knowledge of the franchisee.
Types of Franchising
Product Distribution Franchisee
Business Format Franchisee
Trade Name Franchisee
Product Distribution Franchisee
Franchisee is allowed to distribute
product in a whole or retail form.
Do not allowed the franchisee to make
any change in the product.
Product has to be sale in a specified
geographical area.
Ex. Automobile dealer, Petrol and Gas
dealer.
 Business Format Franchisee
Franchisee has the freedom to modified or
make changes in product or produce a new
product under the license of the franchiser.
Franchisee uses the trademark of the
franchiser along with his methods of ------
Production
Quality control mechanism
Marketing plans
Operational standards.
Ex.McDonald,Ice cream parlors.
 Trade Name Franchisee

Franchiser allows the franchisee to

use his trade name or license for the
product manufactured at the
franchisees plant.
After production he has considerable
freedom to sell them in a
predetermined market area.
 Advantages of Franchising
Advantages to the franchiser
No capital, no risk
Speedily Expansion
Market expansion
Control in the quality
Advantages to the franchisee
Reduced business risk
Operational advantages
Easy finance available
Entrepreneurial benefits