27 May 2005

Franchising (Part I)

The term ''franchising' has been used to describe various types of trading arrangements and opinions differ as to what truely comprises a franchise.

'Stern & Stanworth' (1988) took a broad view of the concept and identified 4 main contexts:
  • Manufacturer - Dealer: Within this agreement, the manufacturer is the franchisor and the franchisee sells direct to the public. Many such franchises are found in the retailing of cars and petrol.
  • Manufacturer - Wholesaler: The most notable examples are Coca-Cola and Pepsi-Co, who franchise the independent bottlers/canners who, in turn, sell to retail outlets.
  • Wholesaler - Retailer: Known as 'Symbol Groups' (would be discussed in part ii)
  • Business Format: The franchisor grants permission for the franchisee to sell the former's products or services. the franchisor also provides a proven method of trading, plus support and advice in setting up and operating the business.

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