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Marketing : Franchising - Research Paper Example
Author : reingermarquise
Pages 7 (1757 words)
Franchising Franchising has become a common marketing practice in today’s world. Franchising is basically a practice in which another firm’s business model is used but this is mostly done for successful firms. Franchising is a practice used as an alternative to building chain stores…
Franchising emerged as a new form of retailing (Bardsley, N., & Key Note Publications. 2000; Kotler, P. 2000) Franchising is a business model in which many different entrepreneurs share a single and common brand name. The person who owns a franchise is known as franchisee and the company who allows the entrepreneur to open up a franchise is known as franchisor. The parent company allows the franchisee to use its brand name and trademarks and also the strategies but in return charges a fee. The franchisee needs to pay a fee for using the parent company’s trademark and strategies etc. The franchisee also needs to pay royalties based on the revenues that it has generated from a certain franchise (Kotler, P. 2000) As explained earlier that franchising is form of retailing and it differs from all other form of retailing methods. Franchises are differentiated by three characteristics. First of all the franchisor is the owner of the trademark and licenses it to the franchisee in return for royalty payments. Second characteristic is that the franchisee pays for the right to be part of the system of the franchisor. And thirdly the franchisor is the one who provides its franchisees with an operating system or a system for doing business (Kotler, P. 2000) Franchising has helped in globalization. Franchising is a practice that has been used by various companies to reach the corners of the world. ...