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Franchises
The philosophy of commercial franchises to enter global markets and their importance:
The economic liberalization and freedom from government restrictions pursued by many countries have helped in the spread of the franchise system, as it is a strategy that guarantees the money and investments of many investors (to provide a ready and professional project with all its systems, ownership of the knowledge ownership, tools and work mechanisms, and comprehensive support from the company that owns the brand to investors, which contributes to the investment security of investors compared to starting the same project independently and working to create a new brand and work systems from scratch – where ownership of a project is based on modern, up-to-date, and professional foundations and systems that guarantee the success of the investment in exchange for a percentage for the company that owns the brand in addition to a fixed annual service fee -). Therefore, the franchise system is one of the most widely used methods in industries for brands that want to obtain a global market share and create a global brand when they want to develop their markets. Therefore, planning to work with the franchise system in the business sector for a prestigious brand with commercial weight and a good reputation is the right decision towards a global trend.
The first steps to implement this system began in the United States of America through the Singer Knitting Machine Company, which designed a commercial franchise system using its own maintenance and service system, giving it its name and trademark. At the beginning of the twentieth century, the American General Motors Company implemented this system through a network of agents, followed by soft drink companies such as Coca-Cola and others, with the aim of expanding sales and distribution. In this vision, we discuss in detail the complete knowledge of the franchising system, its types and contracts, to contribute to making decisions about commercial franchises for the brand through the axes below: –
What is the franchise system?
A franchise is when a company or institution, whether offering a product, service or technology, leases its distinctive brand, as well as its production, marketing, administrative and accounting systems (Franchise Package), and is called (the franchisor – licensor) to another person or company (the franchisee – licensee – Franchisee) who wishes to benefit from the success of the product and the trade name, in exchange for an amount paid to the franchisor in addition to a percentage of the total sales value, and this is on the local or international level. The activity of the licensee (Franchisee) is not considered a branch of the activity of the licensor (Franchisor), but rather is considered an independent business or project under the trade name of the franchisor (licensor), but it is characterized by complete similarity between the different units in different regions despite the difference in their ownership to multiple franchisees (Franchisees).
Franchising covers almost all businesses and services, from advertising and construction to film production and photography companies, printing and copying services, computer services, hotels, in addition to tourism and travel businesses, international restaurant chains, clothing stores, car rental companies, gas stations, electrical appliance stores, etc.