Franchising: what is it in simple words. Types and forms of franchising List what franchising models are

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There are four types of franchising depending on the directions:

  • 1) franchising of goods;
  • 2) industrial franchising;
  • 3) service franchising;
  • 4) business format franchising.

Product franchising is the sale of goods produced by the franchisor and in any way marked with its trademark. The franchisee, as a rule, carries out their after-sales service.

The owner (franchisor) in this type of franchising is the manufacturer. The main transferable right is the right to use the franchisor's trademark. Option III assumes a continuous connection between the manufacturer and wholesale and retail trade, i.e. wholesale company the right to assign the rights of the copyright holder under certain conditions is granted.

Product franchising has not found wide distribution. Such relationships are in most cases beneficial to the franchisor, as they provide him with the promotion of the trademark, the expansion of the distribution system and continuous communication with consumers through the distribution system. At the same time, the franchisee is part of the distribution system controlled by the franchisor.

Since in the vast majority of cases trade enterprises assortment policy is important, trade in selected goods is not always effective.

In cases where a trading enterprise specializes in a separate group of goods, franchising of goods has the right to life, since the seller organizes the sale of goods of a particular company and has the opportunity to bring his image in line with the image of the manufacturer and be recognizable in the market for similar goods. An example effective work General Motors, which is still the leader in the automotive industry, can serve in this direction.

An example can also be given from Russian practice. Unfortunately, it is negative. By 1993, AvtoVAZ, the largest car manufacturer, had completely lost control of the market due to the lack of a unified marketing and pricing policy, and the arbitrary behavior of intermediaries and dealers. The spread of prices among dealers was about 2 thousand dollars, in some cases dealers sold cars cheaper than the factory price, which, of course, led to great difficulties with the sale of products.

Merchandise franchising can be applied in the petroleum products marketing system, especially when filling stations are separated from larger marketing structures. Although, due to changing consumer preferences for the system of services provided at gas stations, the use of pure franchising of goods in this industry is limited. The most effective form of relationship here will be franchising business format, which will be discussed below. Franchising in the oil refining industry is most common in Australia.

Merchandise franchising can also be used to sell cosmetics and branded clothing. An example of commodity franchising in Russia is the Le Monti company. However, in Russia, in the context of the widespread use of various offset and bill payment schemes for products, franchising of goods is unlikely to be widely used in practice.

Unfortunately, the lack of literature on franchising, different interpretations of the system of relations itself cause a misunderstanding of the meaning and attractiveness of franchising and, as a result, its limited application in economic practice.

Manufacturing franchise- This is the most efficient organization of production of a certain type of product. The company, which has the secret of producing raw materials and a patented technology for manufacturing the finished product, provides the final manufacturer with raw materials and transfers the rights to use this technology.

In practice, most often the owner of the rights is an enterprise that is not a producer of raw materials or finished products, and the scheme of relations is formed according to two other options.

The most prominent representative using the system of industrial franchising is Coca-Cola. The centralized production of soft drinks is unprofitable due to the remoteness from consumers and large unjustified costs. Therefore, the commission provides the final producers with a special concentrate and grants the right to use the technology. In 1995, the company entered the Russian market by concluding franchising agreements. It does not conduct independent construction of factories for the production of products; the subject of sales is a production recipe and a well-established trademark.

Production franchising is based on common goals for the parties:

  • - division of labor and specialization of production;
  • - increasing the volume of production and expanding the production program;
  • - Ensuring the cost-effectiveness of production;
  • - increasing the flexibility of production and marketing in accordance with market requirements;
  • - mastering the production of new products, depending on changes in the market.

Manufacturing franchising has much in common with, but is not limited to, a license agreement. Franchising is not just a contract, it is a system of long-term relationships, detailed by the main contract and a special Franchising Guide, which is also the property of the franchisor. The terms of the license agreement are only part of the relationship provided by the franchising system.

Service franchising is a cross between the two types mentioned above. Its scope is services. The essence lies in the fact that the franchisee is granted the right to engage in a certain type of activity under the franchisor's trademark. The franchisor has a number of patented rights that are transferred to the franchisee on the basis of an agreement

The well-known McDonald's franchise system, along with the trademark, the technology of making sandwiches, has its own standards for interior and exterior design of premises, corporate identity in all elements of the organization of food preparation and customer service.

Actively working on Russian market Kodak company. The largest representative of the franchise network - the Marriott company - is familiar to us from the Marriott Grand Hotel.

Service franchising has become widespread and is a promising business technology. The main focus of service franchising is a high level of customer service. Thanks to the joint policy pursued by the franchisor and the franchisee, the consumer quickly becomes aware of the quantity and quality of services he can be guaranteed in a certain period of time at enterprises of a certain brand. Awareness saves consumers time to find and satisfy their customers, and the expected quality of service has, among other things, a positive emotional impact, which increases the likelihood of repeat calls to franchisees. The consumer identifies the owner and user of the trademark, which gives additional impetus to the development of the franchise system.

Franchising is applicable in almost all areas of the service sector. Foreign service companies are increasingly entering the Russian market with an offer to purchase a franchise. A franchise is the entire package of rights, technology, equipment, services, etc., offered by the franchisor for sale.

In the Russian market, service franchising is actively developing in tourism business, in real estate, employment and educational activities.

Business format franchising is the most complex. Along with all the listed rights, the franchisor transfers to the franchisee the technology he has developed for organizing and running a business. The franchisee is fully identified with the franchisor and becomes part of the general corporate system. The franchisor in such franchising can be an enterprise that extracts raw materials, a manufacturer, a wholesaler or retailer, a service industry enterprise, or it can only be the owner of the rights that are transferred to the franchisee under certain conditions under the contract. But at the same time, all enterprises operating in the system must work according to unified methodology, in the same style and respect the internal interests of the system. The business-format franchising system makes it possible not only to expand the business on an intra-industry scale and related industries, but also to include in the system various directions business. The high reputation of the company in one field of activity when using the business format franchising system in practice provides tremendous opportunities for expanding the activities of both the company itself (in this case, of course, it will be a franchisor) and enterprises that will use this reputation for organization and development your business.

Let us illustrate what has been said with a hypothetical example. A gas station is being built on a busy highway. For the modern consumer while waiting for the end of the service, it is often necessary to call, wash your hands, have lunch, buy something and maybe relax. Based on this? it is necessary to form several independent enterprises. In order to avoid the occurrence of potential clients inconsistency of activities corporate style and methodology of their activities must be identical.

The word “franchising” comes from the French “fran-chise”, which means “privilege, privilege, exemption from tax, fee”. Subsequently, this word was fixed in the English-speaking countries. In the Civil Code of the Russian Federation (Article 1027), this term is called “commercial concession” and “commercial concession agreement” and it is defined as follows: “Under a commercial concession agreement, one party (right holder) undertakes to provide the other party (user) for a fee for a period or without specifying a period of time, the right to use entrepreneurial activity user a set of exclusive rights belonging to the right holder, including the right to a trade name and (or) commercial designation of the right holder, to protected commercial information, as well as to other objects of exclusive rights provided for by the agreement - a trademark, service mark, etc.” .

In other words, in essence, franchising is a system of relationships that consists in the transfer by one party (a company that usually has a pronounced image and a high reputation in the market of goods and services) to another party (a company or an individual private entrepreneur) of its means of individualization. goods produced, work performed or services rendered (trademark or service mark, corporate identity), business technology and other commercial information, the use of which by the other party will contribute to growth and secure establishment in the market of goods and services.

At the same time, the transferring party undertakes to assist in the development of business, provide technical and consulting assistance.

Franchising is characterized by the following main features and characteristics:

  • - franchising implies the existence of two parties to the agreement (agreement) - the franchisor and the franchisee;
  • - the franchisor is the owner of exclusive rights: trademark, corporate identity, patent, idea, copyright and similar rights. Using Russian terminology, the franchisor is the copyright holder;
  • - the franchisor, being the right holder, transfers his rights to the franchisee on certain conditions. The franchisee carries out its activities under the trademark of the franchisor, using its reputation in the market of goods (services), and is identified with the franchisor by its corporate identity;
  • - the franchisor acts in the singular; there may be several franchisees working under an agreement with the copyright holder, i.e. this is a kind of network operating according to a single methodology. The purpose of franchising is to run your own business, the purpose of networks is to sell more goods (services) and attract as many participants as possible;
  • - for a successful business, the franchisor provides franchisees various forms support and enjoy the right to regulate the activities of the franchisee in order to maintain its reputation in the market, without violating its legal and economic independence;
  • - for the use of the rights of the franchisor and the support provided, the franchisee makes certain payments.

The emergence of franchising dates back to the early 1800s, to the so-called connected house system used by British brewers. In 1860, according to a scheme very close to franchising, the Singer factory, specializing in the production of sewing machines, operated.

Developed in 1886, the Coca-Cola formula and its sale in 1900 led to a powerful push in the development of franchising; the system began to spread rapidly under the brand name “Coca-Cola”, known to everyone until now. The greatest success in the development of this system was achieved in the 50s. the last century to the McDonald brothers. Currently, the McDonald's franchise system has about 20 thousand enterprises in different countries peace.

In Russia, McDonald's, Baskin Robbins, and Subway can serve as examples of franchising.

Stabilization and further revival of the Russian economy is most directly related to solving the problems of small business development. The role of this sector of the economy has been seriously rethought in recent decades. Now it is considered as necessary condition self-development and stability of its economic system. Thus, in the USA there are about 20 million small firms, in Japan - more than 6.5 million. According to the Ministry of economic development and trade of the Russian Federation, to enable the mechanism of self-regulation, ensuring sustainability and development, our country needs approximately 2.5-3.5 million small private firms. And for the confident operation of such mechanisms, this number should reach up to 9-12 million firms.

Russian small business is in a very difficult position, since in our country its infrastructure is at the very beginning of its formation. One of the ways to accelerate its creation can be the widespread introduction of franchising. Franchising as a method of doing business allows not only to build a system of relationships between small businesses that go into the same franchise scheme, but also to streamline their relations with external contractors, both small and large. With its help, certain bridges are being built between small and large businesses.

Franchising, according to one interpretation of this term, means: to be free, to experience the feeling of freedom from the fact that in this system the entrepreneur owns the business and controls all major decisions related to its economy. Franchising allows you to solve the problem of employment of those who, for various reasons, are unable to open their own business or organize a business, but can and want to continue or start working fruitfully. It also makes it possible to use the labor of young students and persons for whom full employment is impossible - these are housewives or young mothers, pensioners, etc. To a certain extent, at a new stage in the development of market relations in Russia, franchising is intended to replace the “shuttle” business that has begun to die out. .

One of the most serious problems in Russian economy, is associated with the freezing of significant amounts of money by the population, which does not trust banks and stock speculation, as well as various financial schemes after the failure of the well-known pyramid schemes. The population keeps their savings mainly in foreign currency.

The widespread use of franchise systems makes it possible to significantly increase the economic activity of the population and use these funds to invest in small and tiny enterprises.

Sociological surveys conducted in industrial developed countries, show that entrepreneurs who have joined a franchise network are much more success-oriented than ordinary entrepreneurs. Thus, franchising systems unite individuals with clearly expressed positive attitudes towards life. Joint interests form a common vision of both problems and goals and tasks solved in the network. In this sense, franchising is close to network marketing, which gathers under its banner the most adventurous, positive-minded part of the economically active, but free population.

The rapid development of franchise networks has become the most noticeable global trend of the late twentieth century. It is clear that this trend will continue into the new millennium. Russia is now in a state where it is difficult to talk about any general trends in organizational management. However, it can be confidently asserted that by stimulating franchising and its elements as a business management system, the state would thereby lay certain prerequisites for the transition to new, progressive forms of management.

While creating Russian system franchising should be borne in mind that the franchise network consists mainly of small businesses. This means that human factors play a very large role in it.

A Russian entrepreneur is very different from a Western or Eastern one. He has his own views, intentions, traditions of doing business. In addition, it must be taken into account that Russia is a multinational country, and with the beginning of perestroika, cultural and local factors began to have a much greater influence on entrepreneurs than in the previous period. Therefore, as in many other areas, direct borrowing foreign experience unlikely to be successful. The community itself Russian entrepreneurs taking into account international experience, should ultimately work out the final solutions. In this regard, the role of the recently created Russian Franchising Association is enormous.

Many Russian enterprises have technologies that ensure the creation of a product of high quality and necessary for consumers, and if earlier they did not have to look for ways and channels to sell their goods to the consumer - most worked on centralized orders, now this has become a pressing problem. However, many entrepreneurs and business leaders refer to the lack of working capital, implying that the implementation of extensive marketing strategy requires significant financial investments, which the company simply does not have. But this is not entirely true - it is franchising that can help you quickly expand your sales markets without investing significant funds.

Indeed, the organization of branches, own retail or production outlets requires large financial investments, while franchising saves capital by attracting the capital of the franchisee. The franchisee knows the conjuncture and features of the local market more precisely, which is important positive factor. In this case, the main contribution of the franchisor is the trademark, know-how, technology, while the costs of direct organization business, including the maintenance of the management apparatus, the maintenance of the premises, etc., lie with the franchisee. At the same time, the franchisor receives a certain percentage of the profits received from the sale of goods: he also receives a fee for using his name. This requires a small, in contrast to the organization of its own retail and production outlets, the amount of investment.

In the US, the rapid development of franchising was facilitated by the Trademark Law adopted in 1946. Entrepreneurs received additional profit already due to the fact that granting the right to other enterprises to use their trademarks under comprehensive control and protection of the law allowed the owners to expand the boundaries of their business without large additional costs.

Franchising proved its high efficiency and viability even in the conditions of the economic downturn of the mid-70s. The position of franchising companies has been all the more solid since the early 80s, when during the presidency of R. Reagan, the United States experienced an economic boom.

The following statistics were cited in the American literature: during these years, one franchise enterprise was opened every 6.5 minutes in the USA.

Having gained a lot of domestic experience, American franchising moved abroad to sprout in other markets. Many companies have sold their franchises in other countries, and some of them have rapidly expanded their international network. Currently, more than 350 US firms and their franchisees own more than 32,000 retail outlets in other countries.

The rapid development of franchising is observed in Canada, Western Europe, Japan, the states of the Pacific region, Australia, and the countries of the Caribbean region. Franchisors from other countries are also looking at the Russian market. Apparently, international franchising will develop even faster in the near future. Franchisors are looking for potential franchisees in foreign countries, and many individuals and firms are actively looking for franchisors from other countries to acquire their license and rights and, with their financial support, on their production and service technologies to make their profitable business.

For example, a well-known manufacturer of photocopiers, the Xerox company, organized in Russia extensive network centers for copying any handwritten, drawn and printed documents. To do this, the company, as a franchisor, has created centers in Moscow and other large cities through which it finances the purchase or rental of premises, supplies copiers and consumables, trains Russian specialists and monitors their activities. This is an example of franchising services, which not only generates significant profits, but is also a powerful means of advertising Xerox products.

The same Xerox company, as well as its competitors, have created wide sales and service networks in Russia copy equipment. All sales companies use trademarks manufacturers "Xerox", "Canon" and others. Franchisers provide marketers with the necessary instructions, spare parts, transfer know-how for maintenance and repair of equipment, finance advertising campaigns.

Franchising has been and is being used effectively in the bottled soft drink industry by Coca-Cola, Pepsi, and Seven-Up. Thanks to the franchise, these and similar companies were able to produce concentrated syrup centrally and distribute it to bottling plants located not only in the United States, but also abroad, owned and operated by franchisees, who eventually became managers of local retail sales. Franchisees had and have the right to buy branded bottles and use branded trademarks.

This area of ​​business, which is opened under a franchise, on this moment leading in Russia. More than half (namely, 55%) of franchises are sold in the field of commodity franchising. It will be interesting to note that abroad it is the catering franchise that leads the market, and not retail. There is a possibility that we will eventually have the same.

In our country, the opportunity to buy a franchise appeared not so long ago, so it began to grow from the most familiar area for us, namely, from trade. The most popular direction in the field of trade can be called clothing trade. After all, they are met by clothes. Clothes are always needed by everyone.

Trade does not lag behind food products . They also consistently buy franchises for shoes, cosmetics, and jewelry. Due to the fact that we have a fairly large selection of companies under the franchise of which you can start working, franchisors are not deprived of a choice.

Public catering

This type of franchise in the Russian catering market takes 2nd place. Only 20% of establishments that open under a franchise are establishments Catering(Unlike Western countries, where catering is in the first place).

Franchisees always face a difficult choice. After all, you have to choose what is the best cafe to open? What format should it be?


Now quite a lot of formats of catering establishments can be opened by franchise. This is a family cafe, and a sushi bar, and a pub, and even a mini coffee shop.

In this case, it all depends on how much money the franchisee has. After all, depending on the format of the institution, the lump-sum fee will change. But you can note the relationship between the size of the business and the popularity of the brand and the amount of profit.

Services sector

This area occupies about 15% of the total market.

There are a lot of proposals here, they relate to quite different areas. Such areas include, for example, a beauty salon franchise or a bureau franchise. legal services. This list also includes travel companies, and dry cleaning. Many examples can be cited in addition to those given.

Sphere of production

Only 10% of the entire franchised business is collected here.

The most common type of franchise production is production of soft drinks. This franchise is the most unpopular.

But operating under such a franchise means that the franchisor will give his franchisee a number of benefits. They are important enough for the most successful production.

The franchisor provides a developed business plan, provides necessary equipment, is engaged in staff training, organizes the sale of products. We can say that the franchisor provides excellent conditions for the work of the franchisee.

Retail

"Needle"

This is a self service store. Enough stock in the store wide selection goods intended for needlework, as well as sewing accessories. In the store, the buyer can touch and examine everything. This attracts buyers here, regardless of their qualifications.

Business investments are from 6,800,000 rubles

Start of the franchise program in Russia: 2008
The number of stores that are open under the franchise: 8
Quantity own enterprises: 26

O'STIN

This is a fairly well-known brand of clothing store.

The franchisor requires the franchisee to place a store from 250 to 1200 sq.m. and with a population of 50 thousand people. The store is popular both in Russia and abroad.

crossroads

It's a network grocery supermarkets. These are convenience stores. The first store was opened in 1995, in Moscow. Investments for opening a store are up to 41,000,000 rubles.

Public catering

McDonald's

Probably the most popular and most famous chain of fast food restaurants. Although it is rather difficult to call them restaurants. Nevertheless, the brand is popular not only in Russia, but also abroad.

This is a fairly popular, but at the same time, quite expensive option for working under a franchise.

In addition, only one The lump-sum fee for such a franchise is $60,000.The opening of the restaurant will have to invest from $250,000 to $650,000.

In addition, the franchisor strictly selects candidates who can open a business under a franchise. But the franchise is popular, the brand is quite popular. And this fact can be called attractive for people who decide to open a food business.

Killfish

Another famous franchise good example discount bar. Quite popular among young people due to enough low prices. One of the cheapest bars around. The opening costs are approximately 3,350,000 rubles, which, you see, is much lower than the cost of opening a McDonald's restaurant.

Such discount bars are actively opened on a franchise basis in Russia. The franchisor is quite loyal to the choice of candidates. An application for a franchise can be left on the official website of the bar. The franchisor helps to calculate the necessary investments for opening a business, helps with organizing the opening of a bar.

Enough profitable franchise for those who have already been in business and understand that they can handle a business of such a large format.

Mini coffee shop Lucky Day

A mini coffee shop requires a fairly small investment to open, only 145,000 rubles. The franchisor requires a royalty of 2% of the turnover per month and advertising fees of the same amount. Such a business pays off in 4-8 months.

A mini coffee shop will be beneficial for those who do not have experience in their own business due to the fact that investments are quite low, you can do without even attracting borrowed money. In addition, the franchisor helps with the organization of the business.

Services sector

Familia

Beauty salons are opening in Russia and the CIS countries. The advantages of such salons are affordable prices for services and the fact that each client is treated quite friendly, helping him save his time. These beauty salons have stood the test of time.

The cost of investment is up to 1200000 rubles. The royalty payment will be fixed - 15,000 rubles.

The payback of such a project is up to 12 months.

Singum

This is a narrow profile company for intellectual property.

The company is engaged in the sale of trademark registration agreements. The advantage of the company is that the franchisor does not require a franchise. Investments amount to 68,800 rubles. Payback is 1 month.

Production

Sagama

The franchisor allows you to open a tire recycling business.

Now the situation is such that recyclables are practically not recycled. There is a demand for rubber, into which tires are processed. The franchisor provides tire recycling equipment. The cost of the equipment is approximately 8,270,000 rubles.

The advantage of such a business is that there are regular customers crumb rubber Besides, the rubber crumb material is almost free.


Tires that have served their time are simply thrown into the trash, respectively, you only need to pay for the collection of products.

Conclusion

As we can see, franchisees most often open retail stores (55% of all franchises purchased) and catering outlets (20% of all franchises purchased). Moreover, our public catering is very diverse, it can be either a large format like McDonald's or a fairly small format, for example, a mini coffee shop.

Services and manufacturing are less popular. The service sector suffers the most during the crisis. In view of the fact that Russia quite often finds itself in a state of crisis. In general, the franchisee can choose any area of ​​business. It depends on the money that the franchisee has, the experience of running the business, and many other factors.

If the franchisee has not yet had business experience, it is better to choose a budget option, the cost of which will not exceed 200,000 rubles.

04.04.2015

An independent business start from scratch is always difficult, especially if there is no idea about the first steps, the course of development, possible problems on the way to success. If start-up entrepreneurs are constantly looking for their place in the consumer market, then large manufacturers of goods and services are constantly looking for new areas of influence and markets. The natural process was the unification of these two directions moving towards each other. In order to combine common interests into a profitable enterprise, such a way of entrepreneurship as franchising was founded.

In our country, this type of relationship between large companies that own brands and small businesses has received a legislative basis in the form of a commercial concession agreement. Historically, a brand owner who rents out his name, production techniques and secrets of success is called a franchisor, and an entrepreneur who uses someone else's name is called a franchisee. Open franchise business - means to be able to use the trademark, rights and authority of the company, technology and secret commercial information of a large well-known company.

All types franchise business are similar in one thing: it involves two parties. One represents a large, authoritative, successful company, interested in spreading their brand, the second is a small business, ready to start its own, but afraid of the risks associated with inexperience.

In the process of cooperation, one party receives a stable profit in the form of a percentage that the franchise brings . franchise business, in turn, has the opportunity to develop, based on experience big company. In exchange for a monthly payment of interest on income, the franchisee company receives a business that does not need advertising on its part. In addition, the franchisor can act as a guarantor for a business development loan.

Before choosing the right franchise for your startup, you should understand what they are. There are three main areas in franchising:

commodity franchising. This is one of the easiest and least expensive ways to start a business. It implies the sale of certain products of a large manufacturer under a concession agreement. Commodity franchising is most often found in the field of trade household appliances, cosmetics, clothes, shoes, etc.

Manufacturing franchising. The second most common among start-up entrepreneurs. In this case, the franchisee buys the right to produce goods using equipment and technology patented and owned by the franchisor. The owner of the brand at the same time carefully monitors the quality of the products at the output, because his reputation depends on it. The franchisor provides the ward with equipment (under a lease, sale or leasing agreement) and raw materials. An example is such franchisors as Fanta, Coca-Cola, Pepsi, etc.

· Franchising in the service sector. In this case, the franchisee acquires the right to carry out some type of activity to meet the needs of the client. Examples of this type of brand rental include beauty salons, travel companies, restaurants and coffee shops. The franchise extends to a whole set of patent rights. For its part, the tenant undertakes to maintain a unified design of the premises, style and quality of customer service.

For those who want to have their own business, but are not ready to start on their own, a franchise gives a chance not only to make a profit, but also to gain tremendous comprehensive experience.

Franchising is one of the ways of doing business, a kind of market relations between two economic entities. The first is the owner of a company that produces products (goods, services or works) and the business model used in this company. The second is the owner of the official right to use this model, as well as the brand, trademarks, corporate identity and other attributes of the main business in their own independent enterprise.

The key object of franchising. This is the name of a set of rights and obligations that accompany a business developed within the framework of such a system of relations. In addition, the business model itself is called a franchise.

Franchisor- This is the owner of the business, the main recipient of income. He creates a business model, which later acts as the object of the contract. In addition to income from the business itself, the franchisor receives royalties from those who use its business model.

Franchisee- is the owner independent enterprise, which buys from the franchisor for a certain period the right to use its business model and related rights. The franchisee receives income from the use of the franchise.

General idea of ​​franchising

Franchising can be conditionally understood as the rental of business elements: a brand, logo, trademarks, corporate identity, a range of goods or services, and so on. But the most important thing that the franchisee "rents" is the business model. Thus, the franchisee does not open own business from scratch, but uses a ready-made scheme, officially acquiring the right to use it from the franchisor. As a rule, a fixed amount is paid for the purchase of a franchise. It creates the main threshold for newcomers to enter the business.

The legitimacy of borrowing a business model is the main difference between franchising and market plagiarism. The business owner is aware that the model and elements of the business he has developed are used in the interests of other enterprises and contribute to their growth. In exchange for this, such enterprises share their income with the main company and, in turn, contribute to its growth.

The rights and obligations of the parties are fixed by the contract. The document also fixes the financial features of their relationship. For the use of a ready-made business model, the franchisee pays the business owner either a fixed amount once a period, or a percentage of the proceeds received (royalties). The franchisor, on the other hand, gets the opportunity to expand the business without any effort on his part.

An important point: the franchisee is the owner of an independent enterprise, which is neither a branch nor a representative office of the main company. All legal rights and obligations, income and expenses of each franchisee exist separately from the obligations and budget of the main company.

Video - What is franchising?

Variability of franchising conditions

This scheme of cooperation does not imply any single standard of relations. In contrast to the general ideas about trade partnerships, representation, distribution relationships, franchising is very variable.

Financial conditions are not the only aspect that distinguishes different schemes of such interaction from each other. Other requirements may vary. In some franchises, they are as loyal as possible: it is enough to use a trademark, logo, other symbols and assortment. This allows the franchisee to adapt to target audience and geographic location, use creativity and your own strategy.

In some franchises, the requirements can be very strict. Here are just some examples of parameters that the franchisor can strictly regulate and control after the conclusion of the contract:

  • formulation, packaging of goods;
  • uniforms and actions of personnel;
  • layout, dimensions of the premises;
  • price different types products;
  • corporate identity, interior design;
  • equipment and equipment of the company;
  • dimensions, color of interior elements.

In some franchises, the set of requirements can be very strict. In this case, the franchisee has quite little freedom of action - he has to strictly follow the instructions. Moreover, the agreement may provide for regular monitoring and various penalties for deviation from the instructions - up to the revocation of the license.

To ensure the uniformity of the corporate identity and other elements of the business, the main company can send specialists in a particular field (designers, personnel managers, and so on), consultants, controllers. At the same time, in some cases, the costs of the work of such employees are included in the budget of the main company, in some cases they are assigned to the franchisee. This aspect is also regulated by the original contract.

Restaurant chain franchise quick service"Sub way"

In addition, the franchise agreement may imply certain exceptional conditions. For example, it may be provided that in one city, region or country, only one enterprise has the right to act as a franchisee of the main company. The contract may oblige the franchisee to limit or completely exclude their participation in the development of certain types of business, cooperation with certain firms - direct or indirect competitors of the main company.

Types of franchising

Summarizing certain parameters, we can distinguish several main types of franchising:

  1. Commodity- the franchisee gets the right to sell end users products under a particular brand. Historically, this is the very first type of cooperation under this scheme. In addition to the rights to sell, the franchisee usually receives other rights: maintenance, warranty repairs, exchange, consultations, promotions and so on. The terms of the contract may regulate the range of goods, their prices, terms of sale, and so on.
  2. Industrial- the franchisee produces and sells certain goods, materials, equipment. The main difference from commodity franchising is that the franchisee owns proprietary technology and gets at his disposal special equipment for industrial production. In addition to the production technology itself, the terms of the contract may regulate the composition of the personnel at the enterprise, safety standards, environmental and other standards that the final product must comply with.
  3. Service The franchisee provides certain services. At the same time, representatives of the main company control the quality and composition of the services provided. The requirements are usually related to the conduct of promotions and the representative aspect (design, staff uniforms, and so on).
  4. Business - separate view franchising, also called business franchising. It differs in that the main company transfers a license to the franchisee to organize this type of business. The transfer of a license is accompanied by a detailed briefing on employee training and other aspects of the organization of the enterprise.

It should be noted that franchising does not always refer to any one of the listed types. For example, the McDonald's franchise is a business format, as the franchisee receives a business license and detailed instructions for organizing the enterprise. But at the same time, this is partly an industrial franchise (cooking dishes using a certain technology), and partly a service franchise (services selling food and drinks, delivery to an address, a separate procedure for servicing car owners, and so on).

Benefits of franchising

Both the business owner and the franchisee have their own advantages with such a cooperation scheme. Efficiency and mutual benefit are confirmed by at least a long history of franchising in developed countries.

What does the franchisor get?

By owning a business and licensing it to own a franchise, you can secure several benefits:

  1. Partners achieve growth without increasing the staff of the company. Managers and employees are run by the franchisee and are not included in the main staff. All this simplifies the administrative functions for the business owner, relieves him of many financial and social risks. The most difficult problems that jeopardize the reputation of the company as a whole can be solved by revocation of the license.
  2. Income becomes partially passive and quantitatively increases. First, the franchisor receives sales royalties or a fixed payment. Secondly, the contract may often imply the obligation of the franchisee to purchase certain products, equipment, consumables from the main company - this also increases its profitability.
  3. The franchise advertises itself. Unlike a simple business partnership, a franchise is recognizable among consumers. People who have arrived in another city or country, who have already evaluated the proposed products where they were before, will buy them in a new place. That is why much attention is paid to corporate identity, business model and brand philosophy.
  4. Business expansion costs are significantly reduced. The franchisor does not finance the development of new enterprises - all expenses, including construction, repair, decoration, hiring staff, purchasing equipment, are borne by the franchisee. The infrastructure of the main business is growing, while the costs of its owner are minimal - in this, franchising is approaching the network business in terms of efficiency.

Of course, the franchisor can get all these benefits only on condition that he correctly thought out the terms of cooperation, took into account potential risks and leveled them due to fairly strict selection criteria.

What does the franchisee get?

Buying a franchise can be a suitable decision for both a beginner and an experienced businessman. It all depends on the entry conditions and the potential level of profitability. With proper planning, the franchisee will also reap the benefits. It is as follows:

  1. The business model has already been debugged and tested. This is the main plus of the franchise, especially relevant for beginners. A fully autonomous business needs to be planned and thought through. At the same time, there is always a risk of running into low efficiency and losing money. A franchise is much more likely to be profitable: if it has been successful for many years, then it is effective.
  2. Reduced initial development and advertising costs. This benefit is similar to that which the franchisor receives. A franchised enterprise already enjoys prestige and recognition among buyers. Consequently, much less time and money will be spent on getting it approved on the market.
  3. The optimal level of autonomy is maintained. The franchisee is not directly subordinate to the business owner. Their management decisions he accepts himself, this is his main difference from the heads of branches and representative offices. The control of the franchisor is aimed primarily at achieving maximum efficiency again open enterprise- this does not infringe on its legal and economic independence.
  4. Forecasts and prospects are much more accessible than with independent planning. The larger the franchise, the more attention is paid to planning and the more information about business performance is disseminated. Capital investors and start-up businessmen can choose both an industry and a specific franchise from among those competing with each other.
  5. Training is carried out centrally on the basis of an extensive database. The franchisor has information on successes and mistakes, conducts trainings, seminars and master classes. Employees learn much faster. The core company's consultants and experts share knowledge accumulated over years and decades.
  6. Problems are solved at the level of the entire business model. Cohesion and unified management principles imply that management accumulates information about existing problems and finds unified solutions. This eliminates the need to develop the enterprise "by trial and error".
  7. The overall authority of the business increases the loyalty of partners and customers in the field. Business reputation and the philosophy has already been built by the owner of the business - all that remains for the franchisee is to correctly manage the existing potential of opportunities.
  8. There are no problems with the supply of special equipment, Supplies and so on. Either the main company acts as a supplier for franchised enterprises according to the terms of the contract, or it coordinates deliveries and acts as a guarantor of transactions, or makes recommendations based on existing knowledge - in any case, it is much easier to establish supplies than with the development of a completely autonomous enterprise.

The list of franchisee benefits looks quite impressive, although it cannot be said that he is completely free from market risks and all the difficulties associated with the formation of an enterprise that retains legal and financial independence.

Are there any disadvantages to franchising?

There are no perfect business plans. Despite the many benefits, franchising has its downsides. They relate primarily to franchisees, because the risks of a business owner differ little from the risks that would arise with any other system of doing business.

So, what are the negative sides when buying a franchise:

  1. The treaty imposes restrictions on decision-making. Regardless of personal opinion and the current economic situation, the franchisee cannot perform certain actions.
  2. Supply control, on the one hand, allows you to quickly arrange them; on the other hand, it restricts access to the free market. If the prescribed terms of delivery are not the most favorable, the franchisee is still forced to accept them.
  3. The larger the franchise, the more difficult it is to enter the business. We are talking about financial fees, mandatory purchases, creating a corporate identity, and so on. In some cases, opening a franchise business is more expensive and longer than a fully autonomous one.
  4. The deductions that the franchisee pays are used by the business owner at his own discretion. Therefore, if the business owner makes an inefficient decision, then part of the income received by the franchisee will be canceled or even become a loss.
  5. The contract may involve obligations not only when entering the business, but also when leaving it. For example, a franchisee may be deprived of the opportunity to participate in the development of competing enterprises for a certain period.

Despite these shortcomings, franchising is one of the most popular schemes in modern world. It has almost a century of history and great prospects in various countries, including Russia.

Background and development of franchising in the world

The historical founder of this phenomenon and the first franchisor is considered to be the founder American company"Singer". On the basis of an agreement, he transferred to his distributors not only representation and trade, but also the right to repair branded sewing machines. Each contract of this first franchise operated in a certain part of the country.

The prerequisite for this phenomenon was the development of a sales network: Singer sewing machines were a success and were sold throughout the country. Consumers needed to service and repair devices by qualified specialists of the same company. Instead of setting up branches all over the country on his own, Singer decided to transfer the right to maintain machines to financially independent firms. Thus, repair and maintenance became the first services that complemented the functions of distributors and turned them into franchisees.

As a mass phenomenon, modern franchising has existed since the 1920s. Initially, it extended to the production of consumer goods, then to the oil and gas sector, and from the second half of the last century, to various services. The financial crisis in the United States destroyed many large corporations, and the cooperation of business owners with financially independent partners - franchisees - came to the fore.

McDonald's is the most famous franchise in the world.

A classic, textbook case of turning a business into a franchise is the founding of a McDonald's restaurant. Initially, the American entrepreneur Ray Kroc was interested in a small popular restaurant. However, instead of simply buying it up, he entered into an agreement with the owners for the right to establish similar restaurants throughout the country. In this way, he propagated a successful model instead of competing with other single restaurants.

McDonald's Franchise

The key point of this transaction was that Kroc focused his attention on the business model itself. It is believed that this is the first case of establishing a business format franchise, which is used now: the franchisee not only acts on behalf of the business owner, but also uses the same business model. Currently, all McDonald's restaurants (as well as many other similar networks), despite the differences, use the same business principles.

To date, McDonalds remains one of the world's largest franchises: only 15% of the restaurants are owned by the corporation itself - the rest are owned by franchisees. It is worth noting that entering a business is quite expensive, and the terms of the contract regulate all the nuances of doing business. The situation is similar with another of the world's largest franchises - clothing retailer Columbia Corporation. Thus, the Columbia franchisee is obliged to comply with strict requirements for trading platform and purchase from the main company the first batch of goods for 80 thousand dollars or more.

The formation of franchising in Russia

On the Russian territory franchises developed very late compared to the US, Western Europe and other countries. Only since the 1990s, after the transition to market economy, the very principles of the implementation of franchising within the framework of Russian legislation. True, the first time in this area, as in other areas Russian business predominantly chaos reigned.

The first successful franchises in Russia are G. M.R. Planet of Hospitality” and “Sportmaster”. Since 1997, the interests of participants in this market sector have been consolidated - the Russian Franchising Association has appeared. By 2003-2004, there were already more than ten franchises, this way of doing business began to attract forward-thinking participants in the business environment.

As for the crisis of 2008-2009, it had an ambivalent impression on Russian franchising. On the one hand, the number of companies (as well as business entities in general) has decreased. On the other hand, after the recovery of the market in 2010, the renewed business environment in Russia began to use franchising much more actively. In 2011, the total number of franchises was double that of the pre-crisis 2007.

Finally, the crisis of 2014 became critical for many Russian franchises operating on the basis of an agreement with foreign partners. The sale of branded clothing was particularly hard hit. The rise was recorded in areas not dependent on imports: services, tourism, microfinance and so on. Today, the largest franchises in Russia are 1C and X5 Retail Group, the owner of the Pyaterochka, Perekrestok, and Karusel brands.

Franchising Buying Guide

Despite the diversity of the market, the general procedure for choosing and buying a franchise can be reduced to a fairly simple, general algorithm.

  1. The future franchisee analyzes the market and makes a preliminary choice. The main criteria are the prospects of a particular direction in a particular place, the level of competition, the amount of initial investment, and personal interest.
  2. Next, you need to collect as much information about the franchise as possible. In order for the information to be complete, you need to request it from the representatives of the franchisor, fix it during public events, and receive it from open sources (including independent ones). Additionally, it is worth talking with existing franchisees.
  3. If the franchise looks promising, you need to analyze it from a legal point of view- to study the documents for the conclusion of the contract. It is important that the analysis is carried out by an experienced specialist who can detect implicit legal tricks and gaps, if any.
  4. When there is already overall plan when buying a franchise, a detailed description is required. It is necessary to analyze the target market, assess the financial prospects of the future enterprise, plan advertising campaign, outline payback periods and profitability levels.
  5. The final stage of preparation is the selection of premises, personnel and (if necessary) suppliers. Before concluding an agreement and starting to organize the enterprise itself, you need to be sure that there will be no problems with any of the aspects: neither with the territorial, nor with the personnel, nor with the market.

When the preparation is completed, you can conclude an agreement with the franchisor and begin to implement the plan.

Franchising provides significant benefits to both the owner of the main company and each franchisee. In order for the mutual dependence of subjects to be beneficial, and not harmful, it is necessary that the franchise be fully thought out and that its effectiveness be of interest to all participants in the system, without exception. In this case, both the franchisor and the franchisee will be able to count on a stable income.

 

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