Научная статья на тему 'THE BENEFITS OF FRANCHISING'

THE BENEFITS OF FRANCHISING Текст научной статьи по специальности «Экономика и бизнес»

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Ключевые слова
FRANCHISING / FRANCHISE / FRANCHISEE / FRANCHISOR / INTERNATIONAL FRANCHISE ASSOCIATION / BUSINESS

Аннотация научной статьи по экономике и бизнесу, автор научной работы — Спиридонова М.А.

Моя работа посвящена изучению франчайзинга. Целью моей работы является выявление преимущества франчайзинга и причины его популярности. Также мною был проведен анализ успешности Международной Ассоциации франчайзинга.My work deals with the study of franchising. The purpose of my work is to identify the benefits of franchising and the reasons for its popularity. Also, I was conducted an analysis of the success of the International Franchise Association.

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Текст научной работы на тему «THE BENEFITS OF FRANCHISING»

14. Langage SMS / [Электронный ресурс] // Режим доступа: https://texted.ca/app/fr/acronictionary?letter=A , дата обращения 01.12.16

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УДК 334.752

Спиридонова М. А. студент 2 курса ОмГУим. Ф.М.Достоевского экономический факультет профиль «Бухгалтерский учет, анализ и аудит»

Сергина С.А., к.п.н. научный руководитель, доцент кафедра ИЯ Ф. Россия, г. Омск

ПРЕИМУЩЕСТВА ФРАНЧАЙЗИНГА Аннотация: Моя работа посвящена изучению франчайзинга. Целью моей работы является выявление преимущества франчайзинга и причины его популярности. Также мною был проведен анализ успешности Международной Ассоциации франчайзинга.

Ключевые слова: Франчайзинг, франшиза, франчайзи, франчайзер, Международная Ассоциация франчайзинга, бизнес.

THE BENEFITS OF FRANCHISING

Abstract: My work deals with the study of franchising. The purpose of my work is to identify the benefits of franchising and the reasons for its popularity. Also, I was conducted an analysis of the success of the International Franchise Association.

The key words: Franchising, franchise, franchisee, franchisor, international franchise Association, business.

Many companies have appeared in recent years. To open a branch requires a lot time and a lot of money. So there is a new way of organizing business.

Franchising increases the efficiency of small businesses. It allows you to combine the advantages of small and large businesses. Companies are becoming more competitive.

In the US market franchise covers over 50 sectors - from the Internet to banking.

What is franchising? Why entrepreneurs are buying a franchise? What investments are required to buy a franchise? You can find answers to all these questions in this work.

Franchising has become one of the most popular forms of business in the shortest possible time. Most entrepreneurs decide to purchase a franchise, because it is an effective and proven business model.

The aim of my work is to identify the benefits of a franchise and the reasons of its popularity. I also want to find answers to frequently asked questions connected with this issue.

To implement this aim it is necessary to fulfill the following tasks:

1. Describe the concept of the franchise;

2. Identify the benefits of franchising;

3. Analyze the success of the International Franchise Association.

WHAT IS FRANCHISING? THE HISTORY OF THE FRANCHISE

Franchising is a long-term cooperative relationship between two entities—a franchisor and one or more franchisees—that is based on an agreement in which the franchisor provides a licensed privilege to the franchisee to do business. The franchisor grants the franchisee the right to use a developed concept, including trademarks and brand names, production, service and marketing methods and the entire business operation model, for a fee. The franchisee then provides the time, capital, and desire to utilize the brand and services provided by the franchisor to build a thriving business.

The product, method or service being marketed is usually identified by the franchisor's brand name, and the holder of the privilege (franchisee) is often given exclusive access to a defined geographical area for a defined period of time, all of which is defined in the Franchise Agreement.

This robust business model, fuelled by dedicated individuals, encompassing many different skills and backgrounds, opens up countless opportunities for people looking for a new start [1].

Franchising as a system was born in the twentieth century in the United States and originally served as a means for manufacturers to increase sales of its products. Later franchise took independent wholesale and retail firms to remain competitive with retail chains firms [2].

The fastest franchise developed in the US in the 50-60-ies.

The greatest success in the development of the system was able to achieve in 50 years of the twentieth century, the McDonald brothers. Currently, franchise system «McDonalds» has more than 14 thousand. Companies around the world.

Today, franchising has been developed in more than 70 sectors of the economy. Franchising is recognized worldwide as the most advanced form of business, and is widespread in international practice.

In Russia, the franchise was developed with the arrival on the market of such companies as «PizzaHut», «Kodak», «McDonalds», «Coca-Cola» and others [4].

ADVANTAGES AND DISADVANTAGES OF FRANCHISING

Franchising has its advantages and disadvantages. Buying a franchise can be a quick way to set up your own business without starting from scratch. But there are also a number of drawbacks.

ADVANTAGES

"Owning a franchise allows you to go into business for yourself, but not by yourself ". A franchise provides franchisees (an individual owner/operator) with a certain level of independence where they can operate their business. A franchise provides an established product or service which may already enjoy widespread brand-name recognition. This gives the franchisee the benefits of a pre-sold customer base which would ordinarily takes years to establish. A franchise increases your chances of business success because you are associating with proven products and methods. Franchises may offer consumers the attraction of a certain level of quality and consistency because it is mandated by the franchise agreement [3].

Franchises offer important pre-opening support: site selection, design, construction, financing, training, and a grand-opening program

Franchises offer ongoing support: training national and regional advertising operating procedures, operational assistance, ongoing supervision and management support, increased spending power, and access to bulk purchasing [4].

DISADVANTAGES

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 franchisee 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 [5].

In addition to the initial franchise fee, franchisees must pay ongoing royalties and advertising fees. 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 [3].

INTERNATIONAL FRANCHISE ASSOCIATION

The Franchise Action Network (FAN) is a strategic initiative of the International Franchise Association. Locally-owned franchises are America's hidden small businesses.

The franchise industry is under unprecedented attack on the public policy front and the IFA has been leading the fight to protect the franchise industry. From discriminatory minimum wage increases to changes in federal regulations that would recast franchisors as employers of their franchisees' employees, the franchise business model has never come under assault like this in its history. In order to defend the franchise model against these existential threats, franchise businesses need to come together and speak with one, consistent, strong and collective voice on behalf of the industry.

As part of IFA's efforts to neutralize these attacks and educate policymakers that locally-owned franchise businesses create jobs and provide incredible value to local communities, we've created the Franchise Action Network (FAN). The FAN is IFA's grassroots network of franchisees, franchisors and suppliers who are interested and willing to get involved in the conversation and engaged on legislative issues at the federal, state and local levels. By joining together to form the FAN, we seek to create jobs and strengthen America's economy [6].

It is estimated that more than 800 companies are franchising internationally and an additional 100 companies begin their international expansion every year. This represents a unique opportunity to seek opportunities with the world's most established Franchisors [7].

Through the FAN, the franchise industry will seize control of the debate, build our network of grassroots supporters, and educate policymakers and the public about the benefits of franchising.

By joining together in the FAN, we can help to ensure that the franchise model remains a critically important part of the overall U.S. economy [6].

CONCLUSION

The franchisor and franchisee are connected with each other on a system of treaties, which are based on the franchise.

Franchising as a form of business has advantages and disadvantages. The main advantage is that a franchise can significantly expand the market for goods distribution. Franchise empowers small businesses and helps small businesses to survive.

Disadvantages of franchising are related to the standard of the goods and the limitations in doing business. Franchising reduces competition, which leads to lower quality of goods. Franchising is not flexible. It is a very promising type of business.

Only 10 of 100 companies will work in the usual business. In business, franchise will operate 90 out of 100 companies.

Franchising offers a quick path to growth for entrepreneurs as they get ready to deal. Franchising allows the rapid expansion of the franchisee. Franchisee grows, allowing entrepreneurs to finance its growth through the sale of franchises.

Franchising is very popular and it is a perspective view of a business that should develop in Russia and abroad.

References:

1. Martin Mendelsohn «How to evaluate a franchise». Article from the site of the British Franchise Association. Retrieved from http://www.thebfa.org/

2. Lewis G. Rudnick (JULY, 1992) «INVESTIGATE BEFORE INVESTING». Retrieved from http://www.franchise.org/sites/default/files/Investigate%20Before%20Investing.pd f

3. Rupert M. Barkoff- Andrew C.Selden Editors (2008) «Fundamentals of Franchising». Retrieved from https://books.google.ru/books?id=yE3UIKDTxyUC&printsec=frontcover&hl=ru# v=onepage&q&f=false

4. Robert Webber (2013) «An Introduction to Franchising». Retrieved from https://books.google.ru/books?id=nTkdBQAAQBAJ&printsec=frontcover&hl=ru #v=onepage&q&f=false

1.7.1 5. Kavin B. Murphy (2006) «The Franchise Investor's Handbook». Retrieved from https://books.google.ru/books?id=hS4qg_wGwpoC&printsec=frontcover&hl =ru#v=onepage&q&f=false

6. Andrew P. Loewinger, Michael K. Lindsey (2006) «International Franchise Sales Laws». Retrieved from https://books.google.ru/books?id=Du0HjFs-7MAC&printsec=frontcover&hl=ru#v=onepage&q&f=false

7. Don Lunny (2013) «Evaluating Franchise Opportunities». Retrieved from https://books.google.ru/books?id=udYLv0WKCGQC&printsec=frontcover&hl=ru #v=onepage&q&f=false

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