Franchising
What is Franchising?
Franchising is when a company (like KFC) allows someone else to open and run a branch
using its brand name, products, and system in return for money (a fee).
Benefits of Franchising (For Franchisee)
● → Famous Brand – You use a well-known name like KFC.
● → Training and Support – The company trains you and supports your business.
● → Development Program – Helps you grow and improve your business.
● → Easier Financing – Easier to get loans because the brand is trusted.
● → Marketing Help – The company helps with advertisements and promotions.
● → Price Control – Prices are usually fixed, so it's easier to manage.
● → High-Level Management – You get advice and systems from expert managers.
Benefits for the Company (Franchisor)
● → Profit – Earns money from the franchise.
● → Low Risk – The franchisee invests the money, not the company.
● → Demand Product – Popular products increase sales.
● → World Product – Expands the brand globally.
● → Customer Information – Company learns more about customers through franchises.
Types of Franchising
1. Product Distribution Franchising
Focus is on selling the product.
Example: KFC (selling fried chicken).
Similar to wholesalers.
2. Business Format Franchising
The company shares a complete business model.
Includes: brand, training, marketing, product, etc.
Example: Running a full KFC restaurant with full guidance.
3. Manufacturing Franchising
The franchisee manufactures the product using the company’s formula.
Less common.
4. Job Franchising
For small service-based jobs (like cleaning or home tutoring).
The person owns the job but follows the company rules.
Simple Example
If you open a KFC branch, you're not starting a new restaurant from scratch. You use:
- KFC's name,
- their menu,
- their training and support...
In return, you pay them a part of your income.
