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franchising

Prepared by :
Framed by :
TMIQ Abderrahim
Mlle ELIMADI Imane
LAASSILIA Fatima Zahra
RHAZI Loubna
Franchising

Summary
A.What is Franchising
B. Types of Franchising Agreement
C. Types of Franchising
D.Benefits and drawbacks
E. What Franchisor controls on franchisees
F. Famous examples of franchises
G. Conclusion
Franchising

Definition of franchising
Franchising is a form of business organization in
which a firm that already has a successful
product or service (franchisor) licenses its
trademark and method of doing business to
another business or individual (franchisee) in
exchange for a franchise fee and an ongoing
royalty payment.

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Definition of franchising
Franchisor
Franchisee
The
in the franchise
Anparty
entrepreneur
whose
contract
the a
powerthat
is specifies
limited by
methods
to be followed
contractual
agreement
and the
terms
to be met by
with
a franchisor.
the other party

Franchising

Franchising
It is an agreement or license between two legally
independent parties which gives:
o A person or group of people (franchisee) the right to
market a product or service using the trademark or trade
name of another business (franchisor)
oThe franchisee the right to market a product or service
using the operating methods of the franchisor.

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The franchisee the obligation to pay the franchisor fees


for these rights

oThe franchisor the obligation to provide rights and


support to franchisees

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Franchising

TYPE OF FRANCHISING
AGREEMENT
I. Individual Franchise Agreement

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II. Area Franchise Agreement

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III. Master Franchise Agreement

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FranchisorFranchisee relationship
Regulated by contract which usually covers:

Initial fee
Royalty fee/Management fee
Capital required from franchisee
Territory/Area of operation
Duration of license and renewal
IPRs / Intellectual Property Rights franchise
Termination
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Types of franchising

Product distribution franchises


Simply sell the franchisors products and are supplier-dealer relationships.
In product distribution franchising, the franchisor licenses its trademark and logo
to the franchisees but typically does not provide them with an entire system for

running their business. The industries where you most often find this type of
franchising are soft drink distributors, automobile dealers and gas stations.
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Examples

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Produces the
syrup
concentrate
Sells the
syrup
concentrate

FRANCHISEE

Produces the final


drink

Retail Stores
Restaurants & F&B
Outlets

Vending Machine
Operators

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Business format franchise


On the other hand, not only use a franchisors product, service and
trademark, but also the complete method to conduct the business itself,
such as the marketing plan and operations manuals. Business format
franchises are the most common type of franchise.
USA Today reported that the 10 most popular franchising
opportunities are in these industries:
fast food
service
restaurants
building and construction
business services

retail
automotive
maintenance
retailfood
lodging

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Example

Sale, Australia

outlet in

outlet in
Marseille, France

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Franchising in Morocco
Franchising in Morocco started in the 60s ;
the appearance of a new franchise every two
to six months ;

73% annual growth rate over the last three years


363 franchise networks, representing 310 brands
and 2726 sale points, owned and operated by
1041 franchisee, 141 of which are master
franchisees

concentration in area of Rabat-Casablanca

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Franchising Activity

45%

55%

Distribution
Service

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Franchisees
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%

Franchisees

French

American

Others

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Why Franchising ?
7%
30%

47%

Brands
Support and help

Supply of goods

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Steps to Franchising a Business

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Advantages and disadvantages


Owning a franchise allows you to go into business for yourself, but not by

yourself.
A franchise provides franchisees with a certain level of independence where

they can operate their business.


A franchise provides an established product or service which already enjoys
widespread brand name recognition.

This gives the franchisee the benefits of customer awareness which would
ordinarily take years to establish.

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Franchises may offer consumers the attraction of a certain level of

quality and consistency because it is mandated by the franchise


agreement.
Franchises offer important pre-opening support:

site selection
design and construction
financing (in some cases)
training
grand-opening program
Franchises offer on going support

training
national and regional advertising
operating procedures and operational assistance
ongoing supervision and management support
increased spending power and access to bulk purchasing
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The franchisee is not completely independent. Franchisees are required


to operate their businesses according to the procedures and restrictions set
forth by the franchisor in the franchise agreement.
These restrictions usually include the products or services which can be
offered, pricing and geographic territory. For some people, this is the most

serious disadvantage to becoming a franchisee.

In addition to the initial franchise fee, franchisees must pay ongoing


royalties and advertising fees.

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Franchisees must be careful to balance restrictions and support provided


by the franchisor with their own ability to manage their business.

A damaged, system-wide image can result if other franchisees are


performing poorly or the franchisor runs into an unforeseen problem.
The term (duration) of a franchise agreement is usually limited and the
franchisee may have little or no say about the terms of a termination.

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Franchisor controls on franchisees


Restricting of sales territory
Requiring site approval and imposing requirement on
the outlets appearance

Restricting the goods/ services that can be sold


Requiring specific operating hours
Controlling advertising
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Famous examples of franchises


USA

ASIA

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MOROCCO

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KFC

Yves rocher

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Carrefour

ZARA

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Mr. Bricolage

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Conclusion

Investing in a franchise can be a smart


way to start a business.
Starting a company on your own without
any assistance is extremely difficult.

Do you think that Franchising is


important to SMEs ?
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Terminology
Business format franchise : this type of franchise includes not

only a product, service and trademark, but also the complete


method to conduct the business itself, such as the marketing plan
and operations manuals.

Franchise agreement : the legal, written contract between the


franchisor and franchisee which tells each party what each is supposed to
do.

Franchisee : The person or company that gets the right from the
franchisor to do business under the franchisors trademark or trade name.

Franchising : A method of business expansion characterized by a


trademark license, payment of fees, and significant assistance and/or
control.

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Franchisor : The person or company that grants the franchisee

the right to do business under their trade- mark or trade name


product distribution franchise a franchise where the franchisee
simply sells the franchisors products without using the franchisors
method of conducting business.

Royalty : The regular payment made by the franchisee to the


franchisor, usually based on a percentage of the franchisees gross
sales.

Trademark : The franchisors identifying marks, brand name and


logo that are licensed to the franchisee.

UFOC : The Uniform Franchise Offering Circular, UFOC, is one

format for the disclosure document which provides information


about the franchisor and franchise system to the prospective
franchisee.

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Bibliography
Thanae Bennani, Fdration Marocaine de la
Franchise (FMF), Report : Morocco Franchise
Market Information ;
SSELINK,
M.
W.
[Ed.]
,
Commercial
agency, franchise and distribution contracts: (PEL
CAFDC) ;
PETERS,
L.,
Franchising
in
international
organisations,
International
Journal
of
Franchising and Distribution Law, 1 (1999), 255263.

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