4. Понятие франшизы. Обязанности сторон. Преимущества и недостатки данного бизнеса для обоих сторон.

Franchising – business system in which a company (or franchisor) sells an individual (franchisee) the right to operate a business using the franchisors established system or format.

Responsibilities (f-ee):

1. As a part of the franchise agreement the franchisee must pay: franchise fee (or front end fee)- initial sum of money, agrees to pay royalty (or management services fee) for continuing advice and assistance (percentage of annual turnover), advertising fee to contribute to franchisors annual advertising and marketing costs, has to find necessary capital to open the business.

2. Can only sell certain products, purchase products from particular (recommended)suppliers

3. Complies with/conforms to standards (quality of the products, uniform)

4. Has to accept certain conditions as a part of a deal

5. Rules and policy must be followed

6. Responsible for recruitment and managing personnel

7. Provides annual reports on sales

“+”Safe bet- reduced risk, already operating business(quick start), well-known brand image doing well, can rely on f-or in advice and assistance so a chance of quick expansion.

“-” no guarantee:…of financial success in agreement; control: required to follow the system and get approval for changes, no freedom at all; price: Has to pay all the fees, huge financial responsibility, much capital required, pay back at least 7-10 years. If you need more money the f-r won’t offer you any cash. You’ll have to take a bank loan He will literally just take the franchise from you when you lost much money. conflicts: fr-or/fr-ee relations can cause conflict if either side is incompetent(acting in bad faith). Staff may let him down, start study- ready to do unskilled work. Dedication to work.., , flexibility and willingness to work hard are necessary.

f-or:

1. Provides operation manual (information for franchisee how to set up and to run his business)

2. Helps, advises, trains in setting up business; appoint master franchisee (to supervise the business in particular area)

3. Provides equipment that’s required to set up the business

4. Supply a stock of the product, which he obtains in bulk and sells to f-see products above market price.

5. Promotes the business through national advertising

6. Trains staff

7. Controls the way franchisee manages his business

“+” expands business without making investments, no need to recruit personnel, can sell franchises without making any representations as to success or failure of the unit in the franchise agreement, so protected from lawsuits from the franchisee

“-” limited pool of viable franchisees (not a lot of people, who have the financial resources and desire to start up a franchised business, careful system of controlling the work of franchisees(incompetent franchisee can damage the public’s goodwill towards the brand by providing inferior goods) .

How to run successfully:

1.u need to have a lot of dedication to the job. preparation - the most important part - in this business you need to be looking at the future, predict

2. management. staffing is the main problem. Have to find the right people who will enjoy their not a high-paying job. Encourage them- perks, bonuses.

3.money management. You are never shure how much you are going to sell but your bills will remain pretty constant. So, you need to be sure that you are constantly matching 2 issues (bills and income).

4.you have a long- term vision. You won’t get an immediate payback. Should be patient and enjoy daily success

5.trust to franchisor, sure that money u pay goes to advertisement and assistance. Have confidence that the whole business is being managed higher up.