The term Franchising or concession sales designates a business practice (marketing system in the retail trade), with which a Franchise giver puts the regional use of a business concept to a Franchise taker against payment at the disposal (passing on of a business concept). Further meanings: Sales monopoly, Konzessionserteilung, Lizenzvergabe, selfkeep, right to vote, sales concession.

Bases

The Franchising is regulated as the newer contract form neither in the civil law book nor in the commercial code. The Franchise taker is more strongly into the marketing system of the Franchise giver merged than the bare contract dealer. Franchising is used by large-scale enterprises with a branch structure branched out far, in order to transfer the branch managers into an illusory independentness. Although often completely dependent on the central enterprise, have this no employee protection. The employees of the Franchise taker work by this structure in a small firm, which makes the valid making more difficult of employee rights. The Franchise taker sells its products or his service legally independently, pays however fees for the use of uniform equipment, a uniform name and occurrence outward, a symbol or for the use of a mark and a uniform marketing system as well as often for common bookkeeping. The Franchise giver trains the Franchise taker, he examines the conversion of the concept and may instructions give.

The German Franchise federation as follows registered association defines Franchising:

"Franchising is a paragraph system with the goal of the sales promotion, which is based on partnership. The so-called Franchise giver takes over planning, execution and control of a successful operating type. It provides a business total concept, which of its business partners, which Franchise takers, independently at their location one converts. "

The Franchise taker is nevertheless a dealer in the own name and on own calculation.

Word origin

The term "Franchising "is derived from the French word "franchise ". "Franchise "means the release from deliveries and/or fees in the French. This meaning can lead no release to misunderstandings, since Franchising is brought in the today's time with deliveries and fees in connection, however, but a load with deliveries and fees takes place. In 17. and 18. Century was understood by "Franchise "in France and Great Britain the grant of a privilege, which of kings was assigned to reliable personalities. These personalities had to operate then the right against payment production or the trade with certain products. In this connection it becomes clear that "Franchise contains "the use of rights against payment. In the second half 19. Century were common paragraph systems with DEPOSIT eras, agents and which represent forerunners to the today's Franchising. In the insurance industry Franchise "self participation" means.

Advantages for the Franchise taker

• The entrance into the market is accelerated, because the system admits and is established.
• The Franchise taker has area protection.
• The Franchise giver places a tested business concept and to it a complete service range to the order.
• The Franchise giver developed and maintains a good image by marketing of many years this permanently.
• The credit-worthiness is higher with banks, since the business risk is reduced.
• The Franchise taker can use size advantages (e.g. with publicity campaigns or purchases).
• The Franchise taker is a nevertheless independent entrepreneur.

Disadvantages for the Franchise taker

• own business acting strongly reduced by the regulations of the Franchise giver
• Knebelung by often extremely restrictive contracts and by acceptance obligation with the Franchise giver (machines, raw materials etc.)
• Delivery of a part of the incomes to the Franchise giver
• Danger that the own image is impaired by actions of the Franchise giver and the other Franchise takers
• no expansion possibility beyond the agreed upon area

Advantages for the Franchise giver

• The Franchise giver uses in particular the readiness of the Franchise taker as independent entrepreneurs.
• If an existing enterprise is taken over as a Franchise taker, can be fallen back immediately to a current business and a firm customer master.
• The Franchise giver can avoid the substantial expenditure of a branch system and develop a sales network cut for its enterprise.
• The Franchise giver can be market-proven system and know-how with a quite small Kapitaleinsatz marked out.
• more direct and at the same time medium-term capital more careful Marktzugang
• Rationalization, larger efficiency of the system at the market
• rising attractiveness with the suppliers
• faster expansion possibilities
• Market, customer and partner proximity

Disadvantages for the Franchise giver

• Renouncement of a part of the yields
• Danger that the concept and the image are watered
• less market, customer and partner proximity, as if it would open the branches on own calculation
• large control need and appropriate costs

Statistics

The most important Franchise activities in Germany after industries (number of Franchise systems/proportional portion)

• Retail trade: 368/25.6%
• Hotel trade and catering trade: 134/9.3%
• Training and consultation: 126/8.8%
• Person support and - maintains: 118/8.2%
• Office work and business assistance: 114/7.9%
• Faults and mediating: 111/7.7%
• Other selling: 76/5.3%
• Production and processing: 71/4.9%
• Repair and renovation: 63/4.4%
• Transport and feed: 51/3.5%
• Cleaning and maintenance: 48/3.3%
• Letting and leasing: 41/2.8%
• Versandhandel and direct sale: 41/2.8%
• Disposal and recycling: 32/2.2%
• Other service: 23/1.6%
• Investigation and protection: 22/1.5%

Entirely 1439/100%

Source: franchiseportal.de (FranchisePORTAL GmbH) (conditions: 3/2006).

Risks

Despite practical advantages it can occur particularly with smaller and mark-weak Franchise givers (fG) that the system partnership is worth few or nothing (Adverse Selection). Cases, in which the Franchise taker and the obligation purchase some dozen of sides of worthless with a certain wholesale dealer to buy expensively, occur again and again. In the case of long-term obligations to take delivery without precise marketing and training course achievements and/or without obligatory promise of a civil service achievement for the Franchise taker the otherwise meaningful idea of the division of labor and system partnership can present itself thus also as little respectable method of distribution politics, which cannot usually even be complained of beyond that legally.

For the fG it is always a certain risk the fact that it does not have the direct contact to its customers but on the work and handling of its FN is dependent. A bad customer service of a FN could have effects on the entire product.

• Example: "The fingers in the salad "- affair. A customer in the USA had sued the restaurant chain Applebee's (one of the largest family restaurant chains of the USA with 1.700 branches) in June 2005, because she had found allegedly a finger crest together with fingernail in her salad. The stock exchange reacted, the Applebee's share to the NASDAQ slipped after becoming known promptly by 3,2 per cent. (Source: Mirror on-line one)

A disadvantage for the Franchise takers is likewise that their Unternehmensgewinn is diminished by direct and indirect deliveries. Also the contracts can be from the fG to extensive and durably arranged, which harms the FN then in case of a not coming up marketing concept or an unsuitable and/or bad product of the FGs.

Franchisepartner (selection)

• Hotel and catering trade: McDonald's, Burger King, Pizza Hut, Subway, Hooters, Dunkin' Donuts, Taco Bell, Kentucky Fried Chicken, A&W, hello Pizza, Jack into the box, cook spoon, baking work, Coyote Ugly Saloon
• Trade: Obi, Goodyear, Aral, Vodafone, fear for & Olufsen, Benetton (clothes)
• House supplier: Ice man

• Other one: School of music merry, Vobis, arensis, nba

Related links

• German wave, restaurant economics, lesson to the topic '' Franchising '' by the example Obi
• Principle article over the complex relationship between Franchisegeber and - nehmerim entrepreneur magazine pro company (pdf, 318 KB)
• Information and message portal about Franchise

Literature

• Dieter Ahlert: Manual Franchising and Cooperation ISBN 3472045116
• Michael Gerber: The secret of successful companies ISBN 395015180X
• John Love: McDonald's story ISBN 3453099168
• Stefan Merath: The way to the successful Franchisegeber ISBN 3939000795
• fog, Albrecht Schulz, hitting a corner hard Flohr (Hrsg.): Franchise the system ISBN 3472052414

Articles in category "Franchising"

We found here 15 articles.

Related Websites

We found here 4 related websites.

• British Franchise Association
  A non-profit body responsible for developing and promoting fair and ethical franchising through its...


• Franchise Opportunities - Franchising.com
  Directory of franchise opportunities, information for entrepreneurs looking at starting a franchise, attorney directory, informative articles & research, ...


• Franchising - Wikipedia, the free encyclopedia
  Franchising (from the French for free) is a method of doing business wherein ... For franchisees, the main disadvantage of franchising is a loss of control. ...


• Franchising information resource.
  This site will help you find the directions and answers you need, whether you are considering purchasing a franchising opportunity, or franchising out your ...