What is franchising ? What are the benefits of franchising to franchiser and franchisee ?

Solution

A franchising operation is a contractual relationship between a franchiser and the franchisee. There is a written agreement between the franchiser and the independent franchisee which lays down the terms and conditions of sale by the franchisee. Popular examples of franchise stores are McDonald, Liberty, NIIT. In return, the franchisee agrees to operate under conditions set forth by the franchisee. For the help and services provided, the franchises make a capital investment in business, and he also agrees to pay commission on the sales made by him.

Benefits of franchising to the franchiser are :

1. It allows them to conserve capital.

2. The distribution system is established in the shortest possible time.

3. Marketing costs are lowered.

4. It enables the franchiser to increase his goodwill and reputation.

5. The franchiser gains wider acceptance of its brand name through the franchisee.

6. The franchiser gets feedback about the product popularity from the franchisee.

Benefits of franchising to franchisee are :

1. The franchisee can use the name and trademark of the franchiser from attracting customers.

2. There are greater chances of success of the franchisee because the products of the franchiser are well known.

3. The franchisee can get advice and assistance of the franchiser in training his staff, store layout etc.

4. The franchiser ensures a high degree of quality control. This helps the franchisee to satisfy his customers by offering quality products.

Some More Questions From Internal Trade Chapter

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Internal Trade

What is franchising ? What are the benefits of franchising to franchiser and franchisee ?

Some More Questions From Internal Trade Chapter

Give type of Internal Trade.

What is Wholesale Trade

What is Retail Trade

Explain the features of internal trade.

Give the features of wholesalers.

Give the functions of wholesalers.

Enlist the features of retail trade.

Write a short note on Super Bazaar.

What is “one-price shop” ?

Give the types of Multiple Shops.

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