21st Century Real Estate, like McDonald's, BMW, Adidas, Coca-Cola, etc., adopts a franchise model

Franchising means that the franchise owner allows the franchise owner to operate a franchise in the form of a contract. A business operation model in which the operator uses its name, trademark, proprietary technology, products, operation and management experience, etc. for a fee to engage in business activities.

The word franchising is translated from the English franchising. There are currently two domestic translations and understandings of the word franchising: one is translated as franchising. Franchise organizations are juxtaposed with chain stores, free chains, cooperatives, etc., and belong to the category of stores with different ownerships. This translation method is the same as the definition of Western marketing and is a commonly used translation method.

Another translation is franchise chain. It is considered that franchise chain is an organizational form of chain stores, and is listed as three types of chains along with company chain and free chain. In my country, Article 2 of the "Commercial Franchise Management Measures" promulgated by the Ministry of Commerce No. 25 of 2004 defines: Commercial franchising refers to the trademark, trade name, business model, etc. that the franchisor will have the right to grant to others for use by signing a contract. Business resources are granted to the franchisee for use, and the franchisee engages in business activities under a unified business system in accordance with the contract and pays business fees to the franchisor.

Although different countries and organizations have different definitions of franchising, generally speaking, franchising has the following characteristics:

First, franchising involves the franchisor and the licensee The contractual relationship between persons;

Second, the franchisor will allow the franchisee to use its own trade name and/or trademarks and/or service marks, business know-how, business and technical methods, and continuous systems. and other industrial and/or intellectual property rights;

Third, the licensee invests in its business and owns its business;

Fourth, the licensee needs to report to The franchisor pays the fee;

Fifth, franchising is an ongoing relationship.

Refers to a contractual relationship reached between the franchisor and the franchisee. In this relationship, the franchisor provides or is obligated to maintain its interest in the franchise's business activities in areas such as know-how and trained employees; and the franchisee is permitted to use the same equipment owned or controlled by the franchisor. Trademarks, trade names, corporate images, work procedures, etc., but the franchisee owns or invests a considerable part of the business himself.

Franchising is the mainstream business model in the 21st century. As a business method, it can expand to any industry field. According to the definition of the Ministry of Commerce of China, franchising means that by signing a contract, the franchisor will grant the trademark, trade name, business model and other business resources that it has the right to grant to others for use to the franchisee; the franchisee shall operate under a unified business system in accordance with the contract. Engage in business activities and pay franchise fees to the franchisor.

Franchising originated in the United States. In 1851, in order to promote its sewing machine business, the Singer Sewing Machine Company began to grant sewing machine distribution rights and set up franchise stores throughout the United States. He wrote the first standard franchise contract, which is recognized in the industry as the origin of commercial franchising in the modern sense.

Business franchising varies according to the form of the franchise, the content and method of authorization, and the strategic control methods of the headquarters. It can be divided into three types;

1. The production franchisee invests in building a factory, or uses the franchisor's trademark or logo, patent, technology, design and production standards to process or process through OEM. Manufacture licensed products and then sell them through distributors or retailers. The licensee does not deal directly with end users (consumers). Typical cases include: Coca-Cola's bottling plant and the production of Olympic Games logo products.

2. Product-Trademark Franchise The franchisee uses the franchisor’s trademark and retail method to wholesale and retail the franchisor’s products. As a franchisee, the franchisee still maintains the trade name of its original enterprise and sells the products produced by the franchisor and for which the trademark is owned solely or simultaneously with other products.

3. Business model The franchisee has the right to use the franchisor’s trademark, trade name, corporate logo and advertising, and operate it in full accordance with the single-store business model designed by the franchisor; the franchisee is known among the public It appears completely as the franchisor's enterprise; the franchisor implements unified management of the franchisee's internal operation management, marketing and other aspects, and has strong control.

Different definitions: Franchising: It is a variant of license trade. The franchisee transfers the entire operating system or service system to an independent operator, and the latter pays a certain amount Franchise fee.

European Franchise Association: Franchising is a system of marketing products, services or technologies in which the franchisor and his individual franchisees are legally and financially independent but maintain a close and mutually exclusive relationship with each other. In the ongoing cooperation, the franchisee relies on the rights and obligations granted by the franchisor and operates according to the franchisor's concept. Through direct or indirect financial exchange between the two parties, the franchisee can use the franchisor's trade name, trademark, service mark, and business operations. Know-how, business and technical methods, ongoing systems and other industrial or intellectual property rights are operated within the framework and terms of a written franchise contract drawn up by mutual consent.

Advantages of Franchising

Franchising has a history of more than one hundred years, and its success has attracted worldwide attention. In recent years, franchising has also experienced tremendous development in our country. The reason why this distribution method continues to thrive is because of its operational advantages.

1. Franchisors use franchising to implement large-scale, low-cost expansion

For franchisors, with the help of franchising, they can obtain the following advantages:

(1) Franchisors can Implementing centralized control while maintaining a small scale can earn reasonable profits without involving high capital risks, let alone the daily chores of franchisees.

(2) Since franchise stores have a deeper understanding of their regions, it is often easier to discover business scope that the company has not yet covered.

(3) Since the franchisor does not need to participate in the employee management of franchisees, it has relatively few employee issues to deal with.

(4) The franchisor does not own the franchisee's assets, and the responsibility for ensuring the safety of the assets falls entirely on the asset owner, and the franchisor does not have to bear relevant responsibilities.

(5) Franchisors engaged in manufacturing or wholesale industries can establish distribution networks with the help of franchising to ensure market development of products. Some people say that wherever there are people, there is Coca-Cola, and wherever there is color, there is Kodak. Why are these brands so ubiquitous? The reason is that they use franchising to achieve large-scale, low-cost expansion.

2. Franchisees use franchising to "enlarge the base plate"

Some people vividly compare franchising to "enlarging the base plate", that is, using the franchisor's trademark, special skills, and business model to repeatedly use it and thereby expand scale.

(1) You can enjoy ready-made goodwill and brand. Because franchisees have inherited the goodwill of the franchisor, they have a good image during the opening and entrepreneurship stages, allowing many tasks to be carried out smoothly. Otherwise, building an image with the help of a strong advertising campaign is a huge expense.

(2) Avoid market risks. For investors who lack market operations, they are often at a disadvantage in the face of fierce market competition. Investing in a franchisor with good performance and strength, with its brand image, management model and other support systems, greatly reduces the risk.

(3) Share economies of scale. These scale benefits include: procurement scale benefits, advertising scale benefits, operation scale benefits, technology development scale benefits, etc.

(4) Obtain support from various aspects. Franchisees can receive various support from franchisors, such as training, location selection, financing, market analysis, unified advertising, technology transfer, etc.

3． Franchising is popular with consumers because of its management advantages

Another reason for the successful development of franchising is accurate positioning.

Because of its accurate positioning, the company can accurately select the target market, combine marketing strategies around the target market, and understand changes in the target market in a timely manner, making the company's products and services at the forefront of the times.