Franchising: Presented By:-Anuj Goel

FRANCHISING
PRESENTED BY:-
ANUJ GOEL
Meaning of Franchising
 Franchising is a system used by a company (franchisor) that
grants other (franchisees) the right and license (franchise) to
market a product or service under the franchisor’s trade
names, trademarks, service marks and know-how method of
doing the business. It is the format of mutual dependence
which allows both franchisor and franchisee realize profits.
Some Terms Regarding Franchising
 Franchisor :
The licensing company in the franchise agreement.
 Franchisee :
The independent owner of franchise outlet who enters into
an agreement with the franchisor.
 Franchise :
The right to use a specific business name and sell its goods or
services in a specific city, region or country.
Purpose of Franchising
The main purposes that are set to be achieved through
the business include the following:
 To restore the individual entrepreneurship.
 To compete with the big business.
 To allow consumers to buy good quality product or
services at right price.
 To provide entrepreneurs a means to enter the
business with low capital investment and risk.
World Famous Franchise Business
 Top 10 franchise in the world:-
Benefits and Problems of Franchise
Benefits
 An Established Business
A franchise offers the advantage of operating under the
banner of an already established business. The ideas, the
brand, the operating techniques and much more are already
tried and tested and in place ready to be implemented again
and again at a new location as each franchisee takes up the
mantle.
 Business Relationships
The franchisee can also take advantage of the numerous
business relationships already established by the franchisor.
In all likelihood, relationships with suppliers (and perhaps
distributors) will already be in place and easy to manage.
 Support and Security
Franchises offer the advantage of a support and security
system. Often franchisors will offer training schemes and
support with things like the management of accounts, sales,
advertising and more. These sorts of things may well be
included in the price of the franchise fee.
 Less Likely To Fail

The old myth is that 95% of businesses fail within the first 5
years – this (false) point is often championed by franchisors
who are trying to encourage new people into their network.
The security offered by the franchise can give the impression
that the business will be less likely to fail.
Problems
 No Control
The first and most significant disadvantage of a franchise is that the
franchisee has no control of the business or how it is run (or very
limited control). The rules of the business are already established
and part of the franchise agreement. How the business operates is
set out by the brand of the franchise and it is very rare that a new
franchisee will be able to operate outside of these borders.
 Risks From Others

Another disadvantage is the risk that others might damage the
reputation of your business. As a franchisee you would rely on the
brand of the business to bring you customers. If other franchisees
did something to damage the reputation of the brand, this would
have a knock on effect on your own business. Potentially this
could damage your sales and overall profits.
 Franchise Costs
This is a big disadvantage for most franchises – the costs. A
franchisee will often be expected to pay an initial cost to buy
into the franchise agreement. As part of the continuing franchise
agreement, they will then be paying on-going fees for the
support and training provided by the franchisor.
 Difficult to exit business

Selling a franchise business can have potentially more pitfalls as
any buyer is bound by the terms that have been negotiated with
the franchisor when a franchise was granted. The initial franchise
agreement will probably have been negotiated for a fixed period,
so even if the business has been successful, the terms of the
franchise will have to be re-negotiated on renewal and any
potential buyer may be deterred by the uncertainty of the terms
the franchisor may seek to introduce on renewal.
THANK YOU

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FRANCHISING

 Less Likely To Fail

 Risks From Others

 Difficult to exit business

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