Franchise

What do you know about the franchise?

The word franchise itself comes from French is "franchir"which means exempt from theprovision of tribute, tax.

But over time, meaning the franchise turned into granting permission to use the name or trademark.

Franchise is a form of business strategy which aims to widen the reach of efforts inimproving market share and sales. Franchise is a marriage existing business(franchisor) and a newcomer to the world of business (the franchisee).

In the business world, the term franchise or a franchise is the grant of a license by oneparty (individual or company) as provider of franchise to other parties as recipients ofthe franchise to try to use a trademark or trade name by using the overall businesssystem.

Giver is called franchise franchisor franchising while the receiver is called the franchisee.

understanding franchising

Franchise itself comes from the Latin rex ie francorum which means "free from bondage", which refers to the freedom to have the right business. Definition of Franchising (franchising) is an engagement where one party is given the right to utilize and / or use of intellectual property or characteristic of the invention or a business owned by another party with a benefit based on the requirements set forth in the provision and / or sale of goods or services. Put simply, the common thread is the sale of franchises and comprehensive business package that includes ready to use trademarks, material and pengolaan management. Therefore, the parties involved in franchising. Meanwhile, according to Indonesian Franchise Association , which referred to the Franchise is: A system of distributing goods or services to end customers, where the brand owner (the franchisor) gives rights to individuals or companies to conduct business under the brand name, systems, procedures and ways of predetermined period of time covering a particular area.

(Franchising) is divided into two segments namely:

• Franchisor or its franchisees, is a business entity or individual which entitles the other party to utilize and / or using the property rights of intellectual or invention or characteristics of its business. Franchisor must be ready with the equipment business operations and performance management, ensure business continuity and distribution of standard for the long term, and provides a complete business to the smallest detail. Franchisor also must provide a benefit calculation, balance sheet that includes BEP (Break Event Point) and ROI (Return On Investment).
• Franchisee or franchisee, is a business entity or individual is granted the right to utilize and / or use of intellectual property or invention or a characteristic that owned the franchise ^giver. Franchisee only provide a place of business and a certain amount of capital depends on the type of franchise that will be purchased. However, franchisees also have non-financial liabilities that are essential to keep the product image franchise. Franchisee has two financial obligation to pay the franchise fee and royalty fee. Franchise fee is the amount to be paid in return for granting intellectual property rights of Franchisor, which paid for one time (one time fee) at the initial purchase of the franchise. Royalty fee is the amount of money paid periodically which is a percentage of sales turnover. Value franchisee fee and royalty fee is very varied, depending on the type of franchise.

History of Franchising (franchising)

Franchising was first introduced in the 1850s by Isaac Singer, Singer sewing machine maker, when they want to improve the distribution of sewing machine sales. Although his efforts failed, but it was he who first introduced the format of this franchise in the U.S..Then, how is followed by another, more successful franchisees, John S. Pemberton, the founder of Coca ColaNamun, according to other sources, which follow later Singer is not a Coca-Cola, but a U.S. auto industry, General Motors Industry ditahun 1898. Another example in the U.S. is a system of telegraph , which has been operated by various railroad companies but controlled by Western Union as well as exclusive agreements between automobile manufacturers with ^dealers.Franchising is currently dominated by franchise restaurants, fast food.This trend began in 1919 when A & W Root Beer open the quick service restaurant. In 1935 , Howard Deering Johnson worked with Reginald Sprague to monopolize the business of modern restaurants.Their idea is to let their partners to independently use the same name, food, supplies, logo and even building design in exchange for a payment. In its development, business system is subjected to several improvements, especially in the years l950's which later became known as business format franchise (business format) or often referred to as second generation franchise. The development of a franchise system so rapidly, especially in their home country, the United States , causing popular franchise as a business systems in various fields of business, reaching 35 percent of overall retail business in the U.S.. While inEngland , growing franchise pioneered by J. Lyons through its Wimpy and the Golden Egg, in the 60's. Franchise business knows no discrimination. Franchise owner (franchisor) in selecting candidates for its business partners based on mutual benefits, not based on racial intolerance.

Franchise Types

Franchising can be divided into two:

• Franchising overseas / foreign is a franchise that originated from abroad, this waraaba types tend to be more preferred because the system more clearly, the brand has been received at various world, and felt more prestigious. For example: McDonald's, Kentucky Fried Chicken, Bread Talk, Starbucks, Pizza Hut, etc..
• Franchising is a franchise in the country originating from within the country, these kinds of posts profit also one investment option for people who want to quickly become entrepreneurs but lack sufficient knowledge of early tools and the continuation of this effort is provided by the owner waralaba.contoh wara profit Local: Primagama, Alfamart, Martha Tilaar, Roti Buana, Edward Forrer, Bogasari Baking Center and various other names.

Types of franchising (franchise)

In practical implementation, can be found several types of franchising, namely:

1. trade name franchising

in this type of franchisee acquired the rights to produce, for example, PT. Great River have the right to produce clothing in a Triumph with a license from the German.

2. Product distribution franchising

In this type, the franchisee acquired the rights for distribution in certain areas, such as soft drinks, cosmetics.

3. pure franchising / bisiness format

in this type of franchisee obtain full rights, ranging from trademark, sales, equipment, methods of operation, marketing strategy, management and technical assistance, quality control, and others. Examples are restaurants, Fash food, education, and consultant.

Advantages and disadvantages of franchising

The advantage entering the international market with franchising business, are:

• experiences and success factors
• financial assistance from the franchising
• brand name and reputation
• business is already built
• there are quality standards
• Low production costs
• readiness management
• management and technical assistance
• frofit more tonggi
• protection areas
• obtain the benefits of market research and product development
• small risk of failure
• franchisor provide much assistance, to the franchisee.

Franchising losses:

• franchisor's training programs are sometimes far from expectations
• franchisors have little freedom

Franchise Fee Franchise fee covers:

• Initial cost, starting from Rp. 10 million up to Rp. 1 billion. These costs include expenses incurred by the franchisor to make a place of business in accordance with the specifications of the franchisor and the cost of the use of IPR .
• The cost of royalties, the franchisee is paid every month from operating profit. The amount of royalty fees ranging from 5-15 percent of gross income. The cost of a decent royalty is 10 percent.More than 10 percent is typically the costs incurred for the marketing that needs to be accounted for.

Contract manajenen

One for the company to perform expansion or extension of their business abroad damat conducted by a management contract, where contract management can be done if a company rents expertise or knowledge to governments or companies happen outside the country in the form of human resources. The person or the worker has come to the government or company and manage their interests. This method is often done when there are installation of new facilities, whether the government's nationalization of a business entity that was formerly owned by foreign or private, or for companies who are in difficulties.

Contract management often dijimpai also in oparasi trun key, which the company provides services throughout fasiitas new handlers, including design, construction, and pengoprasiannya. Serng Problems encountered in this operation is the length of time the contract, which resulted in the payment schedule length and cause a greater risk of the currency market, where the length of time the money market situation is not always satabil and more likely to fluctuate, so the financial risk will be even greater . Competition in this business are becoming more and more increased with increasing menigkatnya capacity abroad with a new facility.

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