Question 2: What does franchising mean?
Franchising means that the franchisor grants his trademark, trade name, product, patent, proprietary technology and business model to the franchisee in the form of franchise contract, and the franchisee engages in business activities under the franchisor's unified business model according to the provisions of the contract, and pays corresponding fees to the franchisor. Franchise enterprises are also called franchise chains because of their basic characteristics such as unified image and unified management.
Franchising is a method of selling goods and services, not an industry. As a business model, its business processes and methods have the following four characteristics:
1. Individuals (legal persons) have the ownership of trademarks, service marks, unique concepts, patents, business know-how, etc.
2. The obligee authorizes others to use the above rights.
3. The authorization contract contains some adjustment and control clauses to guide the franchisee's business activities.
4. Franchisees need to pay royalties and other fees.
According to the content of franchising, franchising has two basic types:
1. The earlier franchise mode is called product trademark franchise, also known as product distribution franchise, which means that the franchisor transfers the manufacturing right and management right of a specific brand product to the franchisee. The franchisor provides the franchisee with intellectual property rights such as technology, patents and trademarks and the right to use them within the prescribed scope, and does not strictly stipulate the franchisee's later production and business activities. Typical examples of this franchise are car dealers, gas stations, beverage canning and sales. At present, this model has developed very slowly in the world and gradually evolved into a franchise business model.
2. Business model franchise is called the second generation franchise, which is what people usually call franchise at present. It not only requires franchisees to operate the products and services of the head office, but also the quality standards and management policies should be carried out in the way stipulated by franchisees. Franchisees pay franchise fees and continuous royalties, so that franchisees can provide training, advertising, research and development and follow-up support for franchisees. At present, this model is developing rapidly.
Franchise characteristics:
Franchising is a business model that uses its own brand, proprietary technology and management mode, and combines the capital of others to expand its business scale. Franchising is the expansion of technology and brand value for franchisees, the cloning of business model rather than the expansion of capital.
Franchising is a commercial organization whose ownership is controlled by management. Franchisees have the ownership and management executive power of franchise stores, but they do not have the decision-making power. The management decision-making power belongs to the franchisor.
Franchising is a win-win business model. Franchising can only be carried out when the franchisor can obtain more efficient development than direct operation and the franchisee can obtain more benefits than sole operation.
Franchising is a special transaction. In franchising, a special commodity is traded, including a series of tangible or intangible commodities such as products, patents and business models. Different from general transactions, the franchise contract signed by the franchisor and the franchisee means the beginning of long-term transactions between the two parties. During the term of the contract, the franchisor and the franchisee shall maintain close and continuous mutual support and cooperation.
Franchising is a clever form of business organization. Franchising enables franchisees to fully combine and make use of their own advantages and absorb a wide range of social resources to the maximum extent, while franchisees reduce risks and risk costs such as time and capital.