Franšízing -anglicky
Franchise
The word is used in a variety of ways
The right to vote in an election – volební právo
Franchises are granted to various companies that agree to provide a television service in return for the right to sell advertising space on channel.A franchise implies a right that is purchased – licence
A franchise is a business in which exclusive rights are purchased for selling goods or services under a specified trade name and within a specified geographical area. The franchisor offers a business model which is designed to enable an inexperienced franchisee to set up a business format in return for a fixed sum and/or a percentage royalty. The franchisee who is likely to locally based, buys a format that has been tried and tested in other areas. The format includes a licence to trade under the franchisor’s name, to use its trademark or logo. This right is limited to a specific area and for a specific time period.
Advantages and disadvantages of franchises
Franchising is becoming very popular.
Advantages and disadvantages from the perspective of the franchisor:
- Rapid expansion without the high capital cost
- He saves on running costs ( pay, material and administration)
- He benefits from the efforts of franchisees, who have a greater incentives (stimuly, pobídky) to expand the business
- Franchisee has local knowledge
- If a new franchise outlet is in a “marginal” locality – there is benefit to the f-or ( he would have to pay a manager)
- If franchisees are self-employed there may be problem that they will not adhere (držet se, řídit se) to the operational methods
- Failure by an individual franchisee will reflect badly on the whole franchise operation
Advantages and disadvantages from the perspective of the franchisee:
- The franchise involves the purchase of a tried and tested business format
- This is an excellent introduction to running their own business
- There are many benefits:
- A ready-made product or format
- A recognized name known to both potential customers and suppliers
- Public awareness
- Advice, assistance, training
- Lower start-up costs
- Access to the franchisor§s legal and financial advisors
- Loan facilities
- Franchisor will control the business of franchisee ( he loses freedom of action in terms of product, price, terms of sales, place)
- Franchisee will suffer loss of trade if the performance of fellow franchisees causes dissatisfaction to the public
- Fees and payments to the franchisor:
- Initial fee (front end fee) – annual royalty
- Payments for inputs and services
(there is an obligation to buy inputs from the franchisor places)
Franchisee
- Pay a franchise fee (front end fee)
- Pay a royalty (management services fee) : a % of annual turnover
- Pay advertising fee
- Find necessary capital to open the business
- Get advice how to deal with problems
- Respect certain rules (what they can sell, uniforms, behaviour, preferred supplies)
- Buy supplies from particular sources
- Sell only certain products
- Seek approval before selling the business
- Provide regular reports on the level of sales
- Have a reduced risk
- Pay for staff training courses
Franchisor
- Provide an operating manual
- Appoint a master franchisee
- Provide advice on how to deal with problems
- Borrow money to expand
- Invest his/her capital to expand
- Be responsible for national advertising
- No problems of recruiting when they can develop their business
- Look at the business at national and international level
- Promote business through national level advertising
- Run training courses