FRANCHISE

Franchise



Franchise

Introduction

Franchise

Franchising is a continuing relationship in which a franchisor provides a licensed privilege to eh franchisee to perform a business and offers assistance in organizing, trading, and merchandising, managing and marketing in return for a monetary consideration (Diaz-Bernardo, 2013). It is a kind of business through which franchisor (owner) of product or service or method of distribution through affiliated franchise (dealer). It is a very general method for a person to start a business, especially for those who wish to run a high competitive industry like industry of fast food. The greatest advantage to purchase a franchise it to have access to established brand of the market that mean person do not need to spend additional resources to get the product and name out to customers.

Discussion

Types of Franchise

There are three primary types of franchise, trade name franchise, pure franchise and product distribution franchise.

Trade name Franchise

This kind of franchise involves name of brand such as Western Auto or True Value Hardware. In this format, franchisee purchases the right to become the identified with franchisors trade name without distributing the particular product exclusively under the name of the manufacturer.

Product distribution franchise

In this form, franchise licensed to the franchisee to sell the particular products under the brand name and trademark of manufacture through a selective system of distribution (Diaz-Bernardo, 2013). This system is often use in soft drinks (Coca-Cola, Pepsi), Gasoline products (Sunoco, Exxon, and Texaco), automobiles (Oldsmobile, Chevrolet, and Chrysler), cosmetics, appliance and other products.

Pure Franchise

In this business format, franchise provide the franchisee with a complete format of business including a license for a trade name, products or service to be sold, physical plant, operation process, plan of marketing strategy, process of quality control, system of communication and necessary services of business. Franchisee is handover to use all the elements of fully integrated operation of a business (Johnston & Spinks, 2013). This format of franchise is most significantly growing of all franchise and is common mainly in Fast food restaurant (McDonalds, KFC, and Pizza Hut), business service firms, lodging establishment, agencies of car rental, institutions of education, retailers of beauty aid and the promising other growing industries.

Obtain Franchise Business

In order to obtain a franchise, franchisors had a standard of requirements you must meet to be granted a franchise. Some of the conditions may include having a net worth of $250,000 or having a cash reserve of several thousand dollars so in case the company falls on hard times, you would be able to keep it afloat with your personal funds. The franchisor will likely want a personal interview with you to determine if you are qualified to represent their brand. Franchisors do not want you to fail because it looks bad for their brand. Most all of the franchises will require you to go through their training program to learn their brand. They may also want to know your credit score, your financial obligations including a financial statement listing your assets. Your education or skills will also help them determine your ...