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 the usual wholesale trade- attachment of the franchisee to the trademark and trademark of the franchisor. The franchisor, as a rule, supplies the goods 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. A company with the secret of raw material production and patented manufacturing technology 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 producer 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;

increase in production volume and expansion 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 relationship, provided by the system franchising.

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 internal and external design 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 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 franchisee 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.

Starting your own business is not as difficult as it might seem at first glance. If you don't have good ideas for doing business 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 led to the fact that the most successful companies began to appear and operate successfully. different types franchising. 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, the representatives of the franchisor regularly check appearance point of sale, product display, staff training 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 to issue outlet in accordance with the corporate style, provide staff unified form, 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 franchisees 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, in Russia, service franchising is less developed than in the West, also because the population is much less likely to use various types services.

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 the network 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 to discover new outlets for products, while making a minimum effort to expand trading 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.

Basic forms of franchising

To date, certain forms of franchising have developed. One of the most common forms of franchising - This a system of retailers under the auspices of the manufacturer.

Example 14.2. The well-known oil company "Shell" operates on a Franchise system. Around the world, a developed network of gas stations offers a wide range of fuels and lubricants produced by the company, and works according to a single standard. Many manufacturers of world-famous cars, electrical products work according to the same system. household purpose and other goods, presenting to their dealers licenses for the right to trade, if they can provide an appropriate level of quality in sales and service. At the same time, both the owner of a stationary fairly large retail outlet and the owner of a van counter can acquire a franchise.

Another form of franchising is system of wholesalers under the auspices of the manufacturer.

Example 14.3. The most typical example comes from the Soft Drinks Industry. Based on the fact that the main component of Beverages is water, which is inappropriate to transport over long distances, many well-known companies, including Coca-Cola., Pepsi, 7-UP, provide wholesalers with a license to pour liquor. Wholesalers, purchasing concentrate from a well-known company, pour drinks and deliver them to retail stores.

Since 1994, the Coca-Cola company has been bottling the famous Coca-Cola, Sprite, Fanta, Bonaqua, Lemon, Orange drinks in the Republic of Belarus. To sell these drinks, a national distribution and sales system has been created. All drinks are bottled in packages: glass bottles, one- and two-liter disposable plastic bottles, and are also sold through post-mix devices. At the same time, the company uses all possible methods of advertising, attracting the most highly qualified specialists for its production. As a result, Coca-Cola's advertising slogans are always very memorable. Here are some of them:

a pause that is refreshing; freshen up for real; white, red and you; always Coca Colal

The next form of franchising is a system of retailers under the auspices of a service firm.

Example 14.4. Examples in this case are enterprises fast food("McDonald "s"), hotel industry enterprises

(“Hilton”), car rental companies (“Eurocar”), ready-made clothing stores (“Benetton”), etc.

All experts are unanimous in their opinion that franchising will develop very rapidly in the future.

14.3. Key Factors to Consider When Selling and Buying a Franchise

Franchising is effective only when there are a number of conditions, so let's look at the main questions that a potential franchisor should find out when selling a franchise, and a potential franchisee when acquiring it.

Questions that a potential franchisee should ask should be as follows:

How successful are other entrepreneurs who already cooperate with this company;

Is the amount that an entrepreneur must invest when purchasing a franchise for successful management business, or additional equity and debt capital will be required;

how strictly the franchisor treats the problem of selecting a franchisee or any entrepreneur pursuing the goals of momentary profit can become one;

how quickly and profitably, if necessary, you can sell a retail outlet operating on a franchise basis;

how stable the demand for a product or service can be in the long run.

The questions that a franchisor should ask when selling a franchise are:

whether the demand for this product is stable in the region and whether it will continue in the future;

to what extent demand is elastic and to what extent the income level of the population of the region will allow regular purchase of the offered goods or services;

who are the main competitors and whether the appearance of substitute products is possible;

what is the business reputation of the firm that intends to acquire a franchise, and its owners;

how much economic conditions and the legal framework of the region or country that the potential franchisee represents will ensure the normal conduct of business.

Obviously, both a potential franchisor and a potential franchisee are faced with the problem of predicting entrepreneurial risk, and this risk is greater, the greater the capital invested. It should be noted that franchises fail quite often. Entrance fee, which the franchisee must pay varies greatly and depends on the costs of organizing a franchise. According to J. Stanworth and B. Smith, the costs of organizing a franchise range from £6,000 for businesses selling from vans to £12,000,000 for hotels. At the same time, it is possible that the franchisor himself can provide a loan to his franchisees based on the appropriate percentage.

Simultaneously with the establishment of the entry fee, the list of services provided by the franchisor is determined. This list usually includes:

selection and assessment of the location of the future franchise point;

financing or assistance in concluding a leasing contract;

transfer of a complex of corporate identification items, as well as external design and design;

initial staff training, as well as advice and assistance during opening.

According to many authors, the rapid growth of franchising, currently observed throughout the world, will continue in the future, but perhaps in slightly different forms. At the same time, the relationship between the franchisor and the franchisee must be improved and adapted to the changing business conditions.

Franchising, depending on the directions, is of four types: franchising of goods; industrial franchising; service franchising; business format franchising.
Product franchising is the sale of goods produced 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 (Fig. 15.1).
The owner (franchisor) in this type of franchising is the manufacturer. The main transferable right is the right to use the franchisor's trademark. Option III (see Fig. 15.1) assumes a continuous connection between the manufacturer and the wholesaler and retail, i.e., the wholesale enterprise is granted the right to assign the rights of the copyright holder on certain conditions.

Rice. 15.1. Scheme of relations when franchising goods

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 for commercial enterprises great importance has an assortment policy, trade in selected goods is not always effective.
In cases where commercial 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. The spread of prices among dealers was about 2 thousand dollars, in some cases dealers sold cars cheaper than the factory price, which, of course, led to great difficulties with the sale of 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. Most effective form relations here will be franchising business format, 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 credit and bill payment schemes for products, franchising of goods is unlikely to receive wide acceptance. practical use.
Unfortunately, the lack of literature on franchising, different interpretation the system of relations itself cause a misunderstanding of the meaning and attractiveness of franchising and, as a result, the limitations of its application in economic practice.
Production franchising is the most effective organization of production of a certain type of product. A firm that has the secret of producing raw materials and a patented manufacturing technology for the finished product provides the final manufacturer with raw materials and transfers the rights to use this technology (Fig. 15.2).
In option I (see Figure 15.2), 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.

Rice. 15.2. Scheme of relations in industrial franchising

the supplier 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 end producers with special concentrates 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 the economy of production; increase 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 types mentioned 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 (Fig. 15.3).
Service industry enterprise
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.
Actively working on Russian market Kodak company. The largest representative of the franchise network, Marriott, is familiar to us from the Marriott Grand Hotel.
Service franchising received wide use 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
a fixed 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. A franchise is the entire 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 enormous 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 conditional example. Building on a busy highway gas station. 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 (Fig. 15.4). 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

* Calculations use average data for Russia

There are several classifications of types of franchising, which differ from each other depending on which key factor is used as the basis for distinguishing its various types.

One of the most famous franchising specialists in our country, V. Kolesnikov, in his book Building a Franchise Business, lists six main classification options that are used by most modern researchers:

classification by type of activity of the franchisee;

classification by the number of licenses (franchises) issued;

classification according to the development strategy of the franchise system;

classification by functional structure;

classification according to the role and functions of the franchisor;

1. classification by the cost of the franchise (license).

Types of franchising by type of activity of the franchisee

Let's consider them in more detail. In the first case, when using the classification by type of activity of the franchisee, there are three main types of franchise. The first one isfranchise for the sale of finished products (the so-called "commodity franchising"). As its name implies, in this case the franchisor acts as a manufacturer of certain products and transfers the right to sell them in a certain territory to a second person. In turn, this second person (the franchisee) obtains this right by acquiring a franchise for the sale of a certain product under the brand name of the parent company - manufacturer. By definition of V. Kolesnikov, commodity franchising is a way of doing business in which the franchisor is the manufacturer of products and transfers the exclusive right to sell it, limited to a certain territory, to the franchisee by selling a franchise for the sale of finished products under the trademark of the parent company. If the manufactured goods do not have trademarks, then they do not belong to this type of franchising.

Within the same classification, there are alsomanufacturing franchises (the so-called "production or industrial franchising") is a way of doing business in which the franchisor acts as the owner of a patented technology for the production of the original component of the product and transfers the exclusive right, limited to a specific territory, to the franchisee by selling a franchise for the production and marketing of products under a trademark. sign of the parent company with the use of raw materials, materials and technologies supplied by it.

That is, in this case, the franchisee receives from the franchisor a description of the production technology of something (know-how), as well as the right to produce and sell products under the trademark of the parent company using the supplied raw materials and materials. Unlike franchises for the sale of finished products, industrial franchising has not yet become widespread in our country, which is quite understandable. First, in general, manufacturing industry in Russia is undergoing better times. Secondly, this direction requires big investments, and it will be very difficult for newcomers to survive in this market even with the support of the parent company. Although there are positive examples when franchised manufacturing companies quickly recouped their costs and began to bring good profits.

Strictly speaking, production franchising can only be called if the franchisor produces a unique product, develops its own technologies and production secrets. Franchisees in this case also receive the right to use the trademark of the parent company and sell its goods and services. The main difference is that other businesses become part of the franchise cycle. Accordingly, they are subject to higher requirements for the establishment production process quality of products, training of employees, implementation of the plan, provision of strict accountability etc. Most often, such a franchising option is found in the production of drinks (primarily non-alcoholic), when the parent company has different regions local bottling and packaging plants.

In the franchising system, classified by type of activity, such a type of license is also distinguished asfranchise for a certain type of activity . This is such a way of doing business, according to V. Kolesnikov, in which the parent company, acting as the developer of a proven successful franchise business model, transfers the right, limited to a specific territory, to the franchisee to open their own enterprise of the same profile and undertakes to completely copy the format of the franchise business according to a certain model by purchasing a license for a certain type of activity in the service sector under the trademark of the franchisor.

Types of franchising by the number of licenses issued

Based on this criterion, only two types of franchising are distinguished. The first one isfranchising of a single enterprise . This option abroad is most often associated with a family business, where members of the same family perform the functions of both management managers and employees of the company. At the same time, their business is the main form of employment for all employees and the only (or at least the main) source of income for the whole family.

Franchising of the second type, distinguished within this classification, is calledcorporate . If franchising a single enterprise is rather an “archaic” example family business(which, however, does not mean at all that it cannot be successful and profitable), then corporate franchising is a new type of system. This is a company, investment groups or individual investors who are primarily interested in creating a regional franchise network with hired and outsourced workers, and not in the development of one particular franchise enterprise.

Corporate franchising can develop in two main directions. The franchise network in the first case is limited to a certain type of activity. Moreover, as a rule, this activity is controlled by the owner of the parent company - its CEO. In the second case, the franchisee may cover several areas of the franchise business at once, including the service sector, the sale of goods and / or production.

Types of franchising according to business expansion strategy

According to the strategy for expanding the franchise business, there are four types of franchising. The first of these isclassic franchise option (an option is a right to buy), that is, this is a way of doing business in which the franchisee enters into an agreement with the franchisor to purchase a franchise on the terms of an option. According to this agreement, he not only can open one franchised enterprise in a certain territory (which is the most common option), but also receives a pre-emptive right to open several franchised outlets at once on preferential terms and operating under the franchisor's brand. How the franchisee will develop his business in the future depends on the terms of the franchise agreement, where all the conditions are prescribed up to the number of allowed franchises and even the schedule for their opening.

conversion franchising involves the affiliation to the franchisor's brand of an independent enterprise operating in the same or related industry. This scheme is almost equally beneficial to both parties: the franchisee, as in other cases, gets the right to enjoy the "privileges" of the promoted brand, and the franchisor gets a partner who does not require special training and long-term support. The latter already has some experience and own experience, and his, albeit small, firm has a certain reputation and is trusted by customers (which is a big plus especially in the regions).

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The next type of franchising could be called more high level conversion franchise. It is calledchild and is a form of creating franchise enterprises, in which the franchisee is an experienced entrepreneur with his own successfully functioning business. In this case, the goals of such a partnership are somewhat different. Subsidiary franchise company moves to new level of its development - it develops new markets, increases its competitiveness or is engaged in innovative developments.

Also existsmanagement franchise contract . It is a way of organizing the relationship between the franchisor and the franchisee, in which the latter is more of an investor, and not the owner of his own business. His role in the management of the company and in the conduct of business is more passive, he relies on the management of the parent company for almost everything, investing in its development.

Types of franchising by functional structure

When classifying according to the structure of building a franchise network, two main types of franchise are most often distinguished - individual and local (district).Individual franchising called a form of business organization in which the franchisee can open only one franchise business under the brand name of the franchisor. Moreover, it is limited to one specific territory (region).

District franchising gives the franchisee greater freedom: the whole region is at his disposal, although the number of enterprises and the schedule for their opening in this territory are also determined by the parent company.

In our country and abroad, the classic scheme for creating a franchise network is most often used: an entrepreneur acquires a franchise to open one enterprise in a specific territory, then opens his own business and begins to develop it. At this stage, there is usually no big difference between individual and district franchising. It becomes apparent in the second stage, when the individual owner is forced to limit himself to one of his companies, and the district franchise owner begins to create his own franchise network. The latter option is undoubtedly beneficial, especially if the franchisee is interested in developing Western markets. However, it comes with big risks.

District franchising, in turn, can develop on the basis of sub-franchising or on the basis of the development of the region.Sub-franchising is a relationship in which the parent company transfers the exclusive right to the master franchise of the territory of the state where the sub-franchisor is located, with the right to sell sub-franchises to the final franchisees. At the same time, the sub-franchisee also pays his franchisor a certain remuneration and carries out his activities in accordance with the contract.

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Subfranchising involves several main stages. First, a large international master franchisor with a wide network of branches around the world selects a geographical region of interest to him for further development and invites the potential master franchisee to conclude a master franchise agreement with him. Then, under this agreement, the sub-franchisor acquires from its franchisor the right to sell sub-franchises on the territory of its state (also with the obligation to open a certain number of firms for a certain period of time with their further control). New sub-franchise owners pay entry fees and monthly royalties to the sub-franchisor, and the latter makes monthly payments to the parent company. These deductions include his own part of the remuneration, as well as entrance fees and part of the amount from royalties received from other network members.

Development of the region implies such a contractual relationship between the franchisor and the investor of the territory (the person who has the right to develop the territory), in which the parent company gives the latter an exclusive right to develop a certain geographical region in exchange for royalties and the opening of a specified number of franchise outlets for certain time. As in the first case, four stages of work are also assumed here. First, the franchisor studies the activities of its franchisees in the regional network and selects the most successful of them. He invites a partner who owns an individual franchise to become his regional representative in a certain territory. The franchisee, who has become such a representative, also buys from the franchisor the right to select potential franchisees, assists them at the initial stage of launching a franchise enterprise. Then the new franchisee signs an agreement with the franchisor (parent company) and pays an entrance fee to the franchise network and monthly royalties, and the regional representative receives a part of the funds from the entry fee and the amount of royalties.

Types of franchising by the role and functions of the franchisor

According to this classification, four types of franchise systems can be distinguished: the system "manufacturer - retailer"; "manufacturer - wholesaler"; wholesaler-retailer and service provider-retailer. In all four cases, the first is the franchisor and the second is the franchisee.

Types of franchising at the cost of a franchise

Here, experts distinguish from three to seven types of franchise systems. In the first case, one can name small franchise outlets (up to $100,000), medium-sized franchise enterprises ($100,000-500,000), and large franchise enterprises. There are now more common divisions into seven types: franchise firms under $10,000 (commercial cleaning), $10,000-$24,999 (honeymoon trips, educational services for children), 25000-49999 dollars (trade sportswear and inventory), $50,000-99,999 (food, coffee chains, printing services), $10,000-499,999 (food chains, outdoor advertising, restaurant chains), $500,000-1,000,000 (restaurant chains, fitness center chains, hotel chains). Most likely, this classification will be supplemented and changed as the franchise business develops and expands.

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