M anufacturers

Who make finished goods which can be sold

Often using
Cash and carry warhouses and							in the case of perishables technical goods and furniture
Voluntary chains to			Straight to			using			to
Smaller retailers		Larger retailers			Direct selling				Retailers
who then sell to			who then sell to		to			who then sell to
The public			The public		The public			The public
at all stages firms have to warehouse goods

3.9. Say if the statements are true or false. Correct the false variant.

Wholesalers sell mainly to the smaller shops because they cannot compete with the lower prices charged by retailers such as chain stores. Wholesalers have tried to increase their own trade by helping the small shop to charge lower prices. Small shops belong to a voluntary chain because loans can be obtained from the chain for modernizing a shop. Small shops cannot benefit from the advertising because they have to pay for it. A cash-and-carry warehouse always offers credit. Small shops buy from cash-and-carry warehouses because prices are lower as the wholesaler provides credit.

T/F T/F T/F T/F T/F T/F

3.10. Skim through text 3c and formulate its main idea.

Make use of the vocabulary:

brand n торговая марка

expand v расширять

exceed v превышать, превосходить

franchise n лицензия, выдаваемая производителю и т.д.

franchisee n франчайзи (покупатель лицензии)

franchisor n франчайзер (продавец лицензии )

legal adj законный

notion n понятие

reliable adj надежный

transfer n передача

transfer v передавать

violate v нарушать

subsidiary company дочерняя компания

open joint stock company открытое акционерное общество

volume of sales объём продаж

to make a claim заявлять претензию

Text 3c Franchising

Franchising means granting a formal right to the manufacturer, wholesaler or retailer to produce or to sell the company’s goods or services in a special area for a specified period of time. This way of doing business is widely used in the market economy. 40% of all sales in the USA go through franchising which makes $1 billion as annual volume of sales. These figures are presented by International Franchising Association. Franchising in Great Britain is supported by government. The banks give loans to businessmen and the government guarantees 80% of the loan.

Purchase of a franchise is a simple way of starting business. Reliable scheme of doing business, a promoted brand, product of high quality-all these things increase chances of a beginning businessman for success. For a stable company it is a good way of expanding markets. These are great advantages of franchising.

According to Russian Franchising Association, the number of franchises in Russia does not exceed two dozen. In other words it is not developed in our country. History of franchising in Russia dates back to 1993 when Baskin Robbins sold the first franchise in our country. Later some Russian franchises were sold, among them a chain of shoes “ Ekonika”, fast food “ Rostics”, “ Teremok”, “Russkiye bliny”,” Niam-Niam”, filling stations LUKoil, TNK.But still we can’t say that franchising is highly developed in Russia. Legal, administrative and financial problems are in the way of its development. Our laws don’t operate the notion “ franchising”. One of the main things in the process of selling franchise is transfer of a brand name. According to Russian laws, brand name can’t be transferred. Another serious problem is responsibility of subsidiary company. For example, if franchisee in Siberia violates standards of franchisor in Moscow, the consumer has a right to make a claim against low quality of goods or services. Open joint –stock company LUKoil which sells franchises for setting up filling stations has special departments in the areas where its franchises operate.