Franchising types. Types and forms of franchising. Problems arising from the use of franchising………….…25

Starting your own business is not as difficult as it might seem at first glance. If you do not have good ideas for doing business - this is not a problem, today it is quite legal to use other people's ideas and business models to earn money.

Franchising can be applied in a variety of business areas: in manufacturing, trade, services, banking and insurance, etc.

Franchising classifications;
Types of franchises according to the format of interaction between the franchisor and the franchisee;
Types of franchises by type of entrepreneurial activity;
Summary.

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What are the types of franchising?

The success of this form of business has led to the fact that a variety of types of franchising began to appear and operate successfully. Before acquiring one or another franchise, it is worth studying the features of each of them in order to be ready for the format in which you will have to work. There are several classifications of franchise systems. According to the degree of freedom of doing business, there are the following types of franchises:

Standard or classic;
free;
Turnkey business;
Business for rent;
Master Franchise;
Corporate.

According to the format of the enterprise being created and the type of activity, the classification of types of franchising is as follows:

Trade franchising;
Service;
Industrial;
Mixed.

Let's take a closer look at the types of franchising with examples to understand what each of them has advantages and disadvantages.

Standard or classic franchise

This form belongs to the main types of franchising and provides for the payment of a lump-sum fee (fee for the purchase of a business model) and regular payment of royalties. At the same time, the franchisor strictly controls the activities of the franchisee.

For example, if we are talking about trade, then the representatives of the franchisor regularly check the appearance of the outlet, the display of goods, the training of personnel, and much more. In addition, the franchisor sets the size of the trade margin and controls the outlet's turnover. This format is not very common in Russia, as domestic businessmen prefer to have more freedom in doing business.

free franchise

This type of franchise is more attractive for Russian entrepreneurs and, accordingly, more common in Russia, as well as in the CIS countries. Under this model, the entrepreneur gets more freedom in making certain decisions, and the leading role of the franchisor is reduced to a minimum. As well as the size of the relevant payments (royalty, lump sum, etc.).

Turnkey business

This model assumes that the franchisor completely creates a branch of his organization and transfers it to the franchisee, reserving the right to receive part of the profit from his work. This format of cooperation is extremely rare in Russia.

Business for rent

The essence of this type of franchising system is that the brand owner, as in the previous case, creates a branch of his company, but does not transfer ownership of it to the franchisee. The point is rented out, and the entrepreneur manages it with the possibility of receiving a certain percentage of the profits.

Master Franchise

A master franchise is the right to do business under the wing of a franchisor in a certain region. The franchisee gets the right to work in the region alone, opening new branches on their own, or transferring the franchise further, thereby helping to start a sub-franchisee's business.

Corporate franchise

A corporate franchise is a type of franchising, which implies a rather small freedom of the franchisee in making certain decisions. Ownership of the assets belongs to the franchisor, who also controls the business process. In addition, such interaction often provides for a ban on terminating the contract with the franchisor and the impossibility of creating your own business in the same place, but under a different brand.

Types of franchises by type of activity

Trade franchising;

In a retail franchise, the brand owner gives the entrepreneur the right to use his name, his sales methods, and sell his product. Representatives of the franchisor help the businessman arrange the outlet in accordance with the corporate style, provide the staff with a unified uniform, and the store itself with the appropriate equipment. This type of franchising is easier to master and organize, because it is much more widespread than other forms.

A striking example of retail franchising are stores of such brands as: Felix, Positronics, Columbia and others. They help the franchisee to set up a point of sale, organize a business and arrange the supply of goods. Quite often, franchisors promise to start making operational profits as early as three months after the launch of the store.

Service franchising

Service franchising is somewhat more complicated than trade franchising, since it is not enough just to decorate a point in a certain style. The franchisor transfers not only the right to use the trademark, but also technologies, procedures and methods for the provision of certain services. In addition, this type of franchising franchise is often associated with providing the franchisee with specialized software products, specialized literature and information.

This model is less common in practice, since the franchisor must provide detailed rules and procedures in accordance with which each of the branches will have to work. And the entrepreneurs themselves need to be trained and monitored for compliance with the established methodology. In addition, service franchising is less developed in Russia than in the West, also because the population uses various types of services much less frequently.

Manufacturing franchise

Here we are talking about the transfer of a certain technology for the production of goods in demand among the population. It can be baking Ossetian pies or making furniture. The franchisee will have the right to manufacture the same product as the franchisor, use a well-known brand for its labeling, and also sell manufactured products. At the same time, the corporate style, marketing and trade strategies are also transferred.

This type of franchising is quite rare, more often companies acquire a license to manufacture a particular product under a well-known brand.

mixed type

This variant combines elements of each of the above types. Most often there is a mixed type, which includes trade and service franchising. This happens when the franchisor is a manufacturer that sells its products through a network of franchisees who, in addition to selling, also provide customer service. An example is a network of beauty salons opened by a cosmetics manufacturer. As a result, franchisees will provide services to customers using the manufacturer's product, while selling it.

Summary

Franchising has a number of benefits for both brand owners and franchise entrepreneurs. The first ones discover new points of sale for their products, while putting a minimum of effort to expand the distribution network. The latter get the opportunity to work under a well-known brand, spending much less time and money on advertising and promotion. At the same time, you can open a business without having to come up with something original in order to beat the competition.

What type of franchise to use, each entrepreneur chooses for himself, including based on personal qualities, connections and opportunities. Someone is ready to organize production, while someone likes fast and simple trade more. What type of franchise would you choose? Write about it in the comments.

WORK PLAN

Introduction…………………………………………………………………………...3

The essence of franchising…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….
Franchising types………………………………………………………...6
Types of franchising…………………………………………………….…10
Legal basis of franchising………………………………………………………………11
How Franchising Works………………………………………………..21
Pros and cons of franchising……………………………………….…22
Problems arising from the use of franchising………….…25
The need to reform legislation………………..…..29

Conclusion…………………………………………………………………….…34

List of used literature…………………………………………...35

Application…………………………………………………………………………37

INTRODUCTION

The very first question that worries beginner entrepreneurs is how to stay afloat at the initial stage of developing their own business. What problems do Russian entrepreneurs face: lack of start-up capital, difficulties in obtaining acceptable loans, lack of knowledge in the absence of time for training, etc.

One way to solve problems is franchising. The use of franchising allows you to operate under a well-known brand and significantly reduce the risks associated with independent entry into the market.

The franchising system has firmly established itself as one of the most reliable mechanisms that allow you to quickly promote your business. But what is especially important is that franchising is the best option for small businesses. After all, the risk is reduced many times over, and to work under a well-known trademark, an entrepreneur will need several times less investment.

The term "franchising" is absent in Russian legislation. In Russia, franchising is called a commercial concession. Franchising activities are regulated by Chapter 54 of the Civil Code of the Russian Federation. The purpose of a commercial concession is to promote the promotion on the market of goods (works, services) produced (sold) by the right holder.

The right holder (in foreign law - the franchisor) is the person who owns those exclusive rights, the use of which he authorizes the user. The right holder must be an entrepreneur and use his exclusive rights in the course of commercial activities (clause 3 of article 1027 of the Civil Code of the Russian Federation).

User (in foreign law - franchisee) - a person who gets the opportunity to use exclusive rights. He must also be an entrepreneur at the time of concluding a commercial concession agreement (clause 3, article 1027 of the Civil Code of the Russian Federation).

An enterprise created by a franchisee to carry out activities under the franchisor's trademark is referred to in foreign law as a franchise. In Russian law, in relation to a commercial concession agreement, this term is not used.

The development of franchising in Russia is just beginning. The beginning of the use of franchising was due to the formation of civilized relations in the Russian market, which required the use of new business methods. But the world experience of working under a commercial concession agreement has more than 100 years. Experts note that at the moment the main Russian regions where franchising is used quite widely are Moscow, St. Petersburg, Novosibirsk, Nizhny Novgorod and Omsk. The uneven development of franchising is inextricably linked with the economic situation of various Russian territories and the level of business development in the market.

Over the past few years, the proportion of Russian entrepreneurs using franchising has increased significantly in relation to foreign ones. True, it should be noted that franchising is developing in Russia so far only in 8–10 industries. Franchising is actively used by oil companies when creating networks of gas stations, as well as in the service and catering sectors. At the same time, those markets that are almost 80 percent occupied by franchise networks abroad are not covered at all in our country. These are car services, car washes, household services. In a word, in our country this mechanism works best in those industries that currently have the highest rate of return. After all, first the company must become successful itself, and only then think about the development of a franchise network.

ESSENCE OF FRANCHISING

Franchising is one of the new forms of entrepreneurial activity for the Russian economy. It opens up great opportunities for start-up entrepreneurs, most of whom do not have sufficient knowledge, experience and financial capabilities to successfully run a business and therefore need support from successful firms.

The franchising system has become widespread in the USA, Japan, and Western European countries. Its essence lies in the fact that a large and respectable company (franchisor) provides a small business starting its way in business (franchisee) with the right (franchise) for a certain time and in a certain place to conduct entrepreneurial activities using already proven and proven technology. , "know-how", a well-known and popular brand, training opportunities for staff and obtaining the necessary advice. Typically, the franchisor assumes obligations to supply equipment, raw materials and materials, assists in the organization and management of the business, and in some cases provides its franchisees with direct financial assistance by providing loans, or indirect assistance in the form of guarantees and guarantees. All these conditions are stipulated in a special franchise agreement.

A small company, using the help of a franchisor, can start a business in a relatively short time, and constant support from the parent company helps to successfully overcome difficulties, especially at the initial stage of operation. Assistance and support from the franchisor is provided for a fee (royalty), which can be quite high.

Thus, the relations of the parties to a commercial concession are an alternative to relations between the main and subsidiary enterprises, and the franchising method is an alternative to state support for small businesses.

TYPES FRANCHISING

The main types are commodity, manufacturing, business, subsidiary and conversion franchising.

Commodity franchising– transfer of the exclusive right to sell goods with its trademark (retail and wholesale enterprises). In the United States, franchising gained popularity in the early 20th century. as a way to sell cars and gasoline. At that time, franchising was created at the level of distributors (distributors), which gave manufacturers a guarantee that their goods would reach buyers exactly in the form in which they were made. At the same time, the name and trademark of the company were widely used and brought all the benefits to consumers. At present, automobile and gasoline companies are not considered franchisors under US law, while other companies make extensive use of franchising as a way to distribute and distribute their products. In the United States, a way of doing business in which franchisees buy from a leading company the right to sell products with its trademark is called product franchising. Currently, this type of franchising is used by several companies, for example, in the production of tires. If goods and services are not branded, they are not included in this category. Consider how relations look schematically when franchising a product (Fig. 1). In Russia, this type of franchising is used by 1C (software development), R-Style (assembly of computers, sale of brand-name computers, sale of licensed software), as well as General Motors.

Rice. 1. Relationships in commodity franchising

Manufacturing franchise– transfer of patented technology or original components of products. This type of franchising is most widely represented in the production of soft drinks. Each of the local or regional bottling and packaging plants is a franchisee in relation to the main company. Companies such as Coca Cola and Pepsi sell concentrates and other products needed for production to local bottling companies, who blend the concentrates with other compound products and bottle or can them for distribution to local dealers. It goes without saying that the product should not be different. Schematically, the relationship in industrial franchising is as follows (Fig. 1)

Rice. 1. Relationships in industrial franchising

Business franchising (business format franchising). This type of franchising is the most popular. The franchisor licenses to individuals or other companies the right to open stores, kiosks or entire groups of stores to sell to customers a set of products and services under the franchisor's brand. In Russia, the business format is used by: fast food companies (Grillmaster, Rostik's, Russian Bistro, Kentucky Fried Chicken, Subway), laundries (Blue Crestal), dry cleaners (Pink Flamingo ”), photo salons (“Kodak”), copy centers (“Xerox”), shops (“Pyaterochka”, “Kopeyka”, “The Seventh Continent”, “Reebok”, “Nike”, “Ives Rocher”), higher education ( "Moscow State University of Economics, Statistics and Informatics MESI")

Rice. 2 Relationships in business format franchising on the example of a restaurant

Subsidiary franchising is a relatively new and rapidly developing type of franchising relationship and involves the organization of an independent business under the "patronage" of the franchisor.

Conversion franchising began to develop with the advent of real estate brokerage franchise programs in the early 1970s, and then to a certain extent it was used in a number of other services (financial, interior design, used car sales, accounting). There was a transformation (conversion) of the so-called non-selective marketing system (in which the manufacturer sells its products to a wide range of wholesalers and retailers) into selective marketing systems. The latter are characterized by the fact that the products are sold only to wholesalers or retailers operating under the franchising system.

For a better study of the main types of franchising, we present them in a table. Table 1.

Comparative characteristics of the main types of franchising

Type of franchise	Franchise type	Advantages	disadvantages
Commodity franchising		This type of franchise is easy to use.	The franchisee works in a limited area of activity, a narrow specialization
Manufacturing franchise	Technology/original component	It is easy for the franchisor to control the franchisee, high efficiency	Large initial costs for acquiring a franchise are required, the franchisee is highly dependent on the franchisor
business franchising	Franchise business model	Large scope, fast adaptability to market conditions	The initiative of the franchisee is often suppressed by excessive regulation of activities

Based on the table considered, it can be concluded that of all types of franchising, business franchising is the most profitable and preferable, as it has a wide scope and quick adaptability to market conditions.

KINDS FRANCHISING

The main types of franchising are individual and regional (territorial).

With individual franchising, which is the most common type, a license (franchise) is sold for any one type of business.

With regional franchising, two- or three-level franchise structures are created that operate in a certain region (territory) and have a single parent company (single franchisor).

Regional franchising is divided into various subspecies:

franchising with ownership of many enterprises - develops from individual franchising. In this option, the franchisor and the franchisee enter into a regional business development contract, according to which the franchisee has the right to open their businesses in a certain area;

sub-franchising - the parent company has a contract with the franchisee, who is also a sub-franchisor. The latter attracts other franchisees on the basis of a contractual relationship;

developing franchising - differs from sub-franchising in that grass-roots franchisees are bound by contractual relationships with both the sub-franchisor and the franchisor. In accordance with the terms of the contract, the sub-franchisor undertakes to select and properly train individual franchisees, provide them with practical and methodological assistance and monitor their activities. At the same time, the franchisor issues a license (franchise) directly to individual franchisees and has direct contractual relations with them.

Depending on the nature of the activity, franchising should be divided into four types: commodity, production, service, business format or business. It should be noted that European authors adhere to the classification of franchising, which is based on the nature of production, technological and legal relations between the franchisor and the franchisee. In this classification, three types of franchising are distinguished: service, commodity and production. Such a division is more justified, especially considering that in Europe for each of these varieties there is an official definition developed by the court of the European Union.

Thus, commodity franchising is the sale of goods produced by the franchisor or in any way marked with its trademark. The franchisee, as a rule, carries out their after-sales service. The right holder in this type of franchising is the manufacturer, and the main transferable right is the right to use the franchisor's trademark.

Commodity franchising is used in the field of trade. The main thing that distinguishes commodity franchising from ordinary wholesale trade is the franchisee's attachment to the trademark and trademark of the franchisor. The franchisor, as a rule, supplies the product stipulated by the agreement for sale to the franchisee, but the main thing is not the product itself, but the use of a certain assortment and a certain trading technology. Most often, commodity franchising is used to market goods that have a significant brand name or require specific sales services. Typical examples of such goods are gasoline, automobiles, bicycles, alcoholic and non-alcoholic beverages. An example of effective work in this direction is General Motors, which is still the leader in the automotive industry.

Production franchising is the organization of production of a certain type of product. The company, which has the secret of producing raw materials and a patented technology for manufacturing the finished product, provides the final manufacturer with raw materials and transfers the rights to use this technology.

In option 1 (Fig. 2), the franchisor is the producer of raw materials. However, in practice, most often the owner of the rights is an enterprise that is not a manufacturer of raw materials or finished products, and the scheme of relations is formed according to two other options.

The most prominent representative using the industrial franchising scheme is the Coca-Cola company. The centralized production of soft drinks is unprofitable due to the remoteness from consumers and large unjustified costs. Therefore, the company provides the final producers with a special concentrate and grants the right to use the technology. In 1995, the company entered the Russian market by concluding franchising agreements. It does not conduct independent construction of factories for the production of products; the subject of sale is a production recipe and a well-established trademark.

In similar schemes, the owner of the rights can be separated from the owner of the property, exercising control functions through franchising agreements.

The goals of both parties in industrial franchising:

division of labor and specialization of production;

· Increasing the volume of production and expanding the production program;

Ensuring the cost-effectiveness of production;

· increasing the flexibility of production and marketing in accordance with market requirements;

· development of production of new products depending on changes in the market.

The scheme of production franchising is efficient in almost all industries. The main condition is the availability of rights to intellectual property objects, confirmed by security documents (including a trademark). Production franchising has much in common with a license agreement, however, franchising is not just a contract, but a system of long-term organizational and economic relations, detailed by the main agreement and a special “franchising manual”, which is also the property of the franchisor. The terms of the license agreement are only part of the relations provided by the franchising system.

According to the Decision of the EU Court of January 28, 1986 No. 161, service franchising is understood as a contract under which the franchisee, acting in accordance with the instructions of the franchisor, provides services under the brand name and service mark of the franchisor. Service franchising is a cross between commodity and production franchising. Its scope is a service. The essence lies in the fact that the franchisee provides the right to engage in a certain type of activity under the franchisor's trademark. The franchisor has a number of patented rights that are transferred to the franchisee on the basis of an agreement.

For example, the well-known McDonald's system, along with the trademark, hamburger cooking technology, has its own standards for interior and exterior design of premises, corporate identity in all elements of the organization of cooking and customer service.

Service franchising is very common and is one of the most promising business technologies. The main focus of service franchising is a high level of customer service. Thanks to the joint policy pursued by the franchisor and the franchisee, the consumer quickly becomes aware of the quantity and quality of services he can be guaranteed in a certain period of time in establishments of a certain brand. Awareness saves time for consumers to find and satisfy their needs, and the expected quality of service has, among other things, a positive emotional impact, which increases the likelihood of a client returning to the franchisee. The consumer identifies the owner and user of the trademark, which gives additional impetus to the development of the franchise system. Franchising is applicable in almost all areas of the service sector. Moreover, the range of services can be extremely wide and limited only by the imagination of the franchisor.

Business format franchising constitutes an integrated approach to the transfer of the franchisor's business to the franchisee. In the international literature, business format franchising is characterized as second generation franchising. Along with all the listed rights, the franchisor transfers to the franchisee the technology he has developed for organizing and running a business. The franchisee is fully identified with the franchisor and becomes part of the overall corporate system. The franchisor in such franchising can be an enterprise that extracts raw materials, a manufacturer, a wholesaler or retailer, a service industry enterprise, or it can only be the owner of the rights that are transferred to the franchisee under certain conditions under the contract. But at the same time, all enterprises operating in the system must work according to a single methodology, in a single style and observe internal system interests. The business format franchising system makes it possible not only to expand the business on an intra-industry scale and related industries, but also to include various business areas in the system. The high reputation of the company in one field of activity when using the business format franchising system in practice provides tremendous opportunities for expanding the activities of both the franchisor itself and the franchisees who will use this reputation to organize and develop their own business. Business-format franchising serves as an effective tool for disseminating the achievements of scientific and technological progress, advanced methods of organizing marketing and market activities in the business environment.

The most widespread in the world and in Russia are trade and service franchising, and very often both of them are used in a combined form, since the provision of services is usually accompanied by the supply of goods necessary for them (materials, raw materials, components, etc.), also how the sale of products requires after-sales service.

Franchising Forms

The development of franchising predetermined the emergence of new forms of franchising, such as option-based franchising, conversion franchising, sub-franchising.

The essence of option-based franchising is that the franchisee has certain advantages, he is allowed to open not one, but several new franchise enterprises on preferential terms under the franchisor's trademark, and the franchise agreement reflects the number of franchises, the schedule for opening franchise enterprises, the territory of development of a particular region.

Conversion franchising provides that the franchisor joins an independently operating enterprise on the basis of a franchise agreement and the provision of a franchise. This enables the franchisee to enter the market under the franchiser's brand as a representative of a well-known company, gain access to advanced technologies for the sale of goods and, ultimately, attract customers and increase business efficiency. This form of franchising has become widespread in real estate agencies, in oil companies using service stations.

Sub-franchising is a form of contractual relationship between the master franchisor (a successful franchise company with an extensive international franchise network) and the master franchisee, in which the master franchisor transfers the exclusive right to the master franchise of the territory where the master franchisee is located, with the right to sell a certain amount sub-franchises within a specified period of time and under the control of the master franchisee. In fact, the master franchisee is the franchisor in this territory, as he directly concludes contracts with the franchisees and receives their entry fees and monthly royalties. The franchise fee is paid to the master franchisor for the granted right to develop the territory under the master franchise agreement on a monthly basis, which includes part of the remuneration from the entrance fee and part of the amount from the royalty fee received under the subfranchising agreement between the master franchisee and sub-franchisors.

There are four types of franchising depending on the directions:

1) franchising of goods;

2) industrial franchising;

3) service franchising;

4) business format franchising.

Product Franchise represents the sale of goods manufactured by the franchisor and in any way marked with its trademark. The franchisee, as a rule, carries out their after-sales service. The relationship scheme is simple rice. 15.1).

Rice. 15.1. Scheme of relations when franchising goods

The owner (franchisor) in this type of franchising is the manufacturer. The main transferable right is the right to use the franchisor's trademark. In variant III (cf. rice. 15.1) a continuous connection of the manufacturer with wholesale and retail trade is assumed, i.e., the wholesale enterprise is granted the right to assign the rights of the copyright holder on certain conditions.

Product franchising has not found wide distribution. Such relationships are in most cases beneficial to the franchisor, as they provide him with the promotion of the trademark, the expansion of the distribution system and continuous communication with consumers through the distribution system. At the same time, the franchisee is part of the distribution system controlled by the franchisor.

Since in the vast majority of cases, assortment policy is important for trade enterprises, trade in selected goods is not always effective.

In cases where a trading enterprise specializes in a separate group of goods, franchising of goods has the right to life, since the seller organizes the sale of goods of a particular company and has the opportunity to bring his image in line with the image of the manufacturer and be recognizable in the market for similar goods. An example of effective work in this direction is General Motors, which is still the leader in the automotive industry.

An example can also be given from Russian practice. Unfortunately, it is negative. By 1993, AvtoVAZ, the largest car manufacturer, had completely lost control of the market due to the lack of a unified marketing and pricing policy, and the arbitrary behavior of intermediaries and dealers. Dealer prices varied by about $2,000, and in a number of cases dealers sold cars for less than the factory price, which naturally led to great difficulties in marketing the products.

Merchandise franchising can be applied in the petroleum products marketing system, especially when filling stations are separated from larger marketing structures. Although, due to changing consumer preferences for the system of services provided at gas stations, the use of pure franchising of goods in this industry is limited. The most effective form of relationship here would be business format franchising, which will be discussed below. Franchising in the oil refining industry is most common in Australia.

Merchandise franchising can also be used to sell cosmetics and branded clothing. An example of commodity franchising in Russia is the Le Monti company. However, in Russia, in the context of the widespread use of various offset and bill payment schemes for products, franchising of goods is unlikely to be widely used in practice.

Unfortunately, the lack of literature on franchising, different interpretations of the system of relations itself cause a misunderstanding of the meaning and attractiveness of franchising and, as a result, its limited application in economic practice.

Manufacturing franchise- this is the most effective organization of production of a certain type of product. The company, which has the secret of producing raw materials and a patented technology for manufacturing the finished product, provides the final manufacturer with raw materials and transfers the rights to use this technology ( rice. 15.2).

Rice. 15.2. Scheme of relations in industrial franchising

In variant I (cf. rice. 15.2) the franchisor is the manufacturer of raw materials. However, in practice, most often the owner of the rights is an enterprise that is not a manufacturer of raw materials or finished products, and the scheme of relations is formed according to two other options.

The most prominent representative using the system of industrial franchising is Coca-Cola. The centralized production of soft drinks is unprofitable due to the remoteness from consumers and large unjustified costs. Therefore, the commission provides the final producers with a special concentrate and grants the right to use the technology. In 1995, the company entered the Russian market by concluding franchising agreements. It does not conduct independent construction of factories for the production of products; the subject of sales is a production recipe and a well-established trademark.

Production franchising is based on common goals for the parties:

● division of labor and specialization of production;

● increase in production volume and expansion of the production program;

● ensuring cost-effectiveness of production;

● increasing the flexibility of production and marketing in accordance with market requirements;

● mastering the production of new products depending on changes in the market.

Manufacturing franchising has much in common with, but is not limited to, a license agreement. Franchising is not just a contract, it is a system of long-term relationships, detailed by the main contract and a special Franchising Guide, which is also the property of the franchisor. The terms of the license agreement are only part of the relationship provided by the franchising system.

Service franchising is a cross between the two above. Its scope is services. The essence lies in the fact that the franchisee is granted the right to engage in a certain type of activity under the franchisor's trademark. The franchisor has a number of patented rights that are transferred to the franchisee on the basis of an agreement ( rice. 15.3).

Rice. 15.3. Scheme of relations in service franchising

The well-known McDonald's franchise system, along with the trademark, the technology of making sandwiches, has its own standards for interior and exterior design of premises, corporate identity in all elements of the organization of cooking and customer service.

Kodak is actively working on the Russian market. The largest representative of the franchise network -
Marriott is familiar to us from the Marriott Grand Hotel.

Service franchising has become widespread and is a promising business technology. The main focus of service franchising is a high level of customer service. Thanks to the joint policy pursued by the franchisor and the franchisee, the consumer quickly becomes aware of the quantity and quality of services he can be guaranteed in a certain period of time at enterprises of a certain brand. Awareness saves consumers time to find and satisfy their customers, and the expected quality of service has, among other things, a positive emotional impact, which increases the likelihood of repeat calls to franchisees. The consumer identifies the owner and user of the trademark, which gives additional impetus to the development of the franchise system.

Franchising is applicable in almost all areas of the service sector. Foreign service companies are increasingly entering the Russian market with an offer to purchase a franchise. Franchise- this is the whole package of rights, technology, equipment, services, etc., offered by the franchisor for sale.

In the Russian market, service franchising is actively developing in the tourism business, in the field of real estate, employment and educational activities.

Business format franchising is the most complex. Along with all the listed rights, the franchisor transfers to the franchisee the technology he has developed for organizing and running a business. The franchisee is fully identified with the franchisor and becomes part of the overall corporate system. The franchisor in such franchising can be an enterprise that extracts raw materials, a manufacturer, a wholesaler or retailer, a service industry enterprise, or it can only be the owner of the rights that are transferred to the franchisee under certain conditions under the contract. But at the same time, all enterprises operating in the system must work according to a single methodology, in a single style and observe internal system interests. The business format franchising system makes it possible not only to expand the business on an intra-industry scale and related industries, but also to include various business areas in the system. The high reputation of the company in one field of activity when using the business format franchising system in practice provides tremendous opportunities for expanding the activities of both the company itself (in this case, of course, it will be a franchisor) and enterprises that will use this reputation for organization and development your business.

Let us illustrate what has been said with a hypothetical example. A gas station is being built on a busy highway. The modern consumer, in anticipation of the end of the service, often needs to call, wash their hands, have lunch, buy something and maybe relax. Based on this, it is necessary to form several independent enterprises ( rice. 15.4). In order to avoid inconsistency among potential customers, the corporate identity and methodology of their activities should be identical.

Rice. 15.4. Scheme of relations in business format franchising on the example of gas stations