What is franchising? Franchising is a powerful organisational form with the potential to deliver great benefits to businesses in an increasing range of countries and industry sectors.
What is franchising? Two key kinds of Franchising
The first is business format franchising. The second is product and trade name franchising.
Business format franchising is a method of business expansion whereby a business owner or manager allows someone to market products or services.
Specifically, under their name and trademark and with strict adherence to a prescribed system.
In return the franchisee, as the person or organisation is called, pays an initial fee and usually some form of ongoing contribution.
The franchisee also pays all of the costs of getting into his/her own business.
The incidence of business format franchising really started to grow in the United States during the mid 1950’s.
It has continued to expand rapidly since that time – throughout the world.
Many different types of businesses have franchised their operations.
Well known international franchise systems include McDonald’s, Subway, Blockbuster and Century 21.
Large New Zealand franchise examples include Stirling Sports, Fastway Couriers, Harcourts and Greenacres.
Business format franchising can be distinguished from product and trade name franchising.
Which uses franchisees to distribute a product under a franchisor’s trademark.
This is common in automobile sales, retail gasoline, and soft drink distribution. Coca Cola is an often mentioned example.