It is possible to examine the franchising system in two groups in terms of its applications. According to the country where the system is applied: National and International Franchising can be mentioned. In terms of the opportunities offered; It is possible to classify Product and Brand Franchising as Business System Franchising.
A. What is National and International Franchising?
If the Franchising Agreement is made within the borders of a country, between cities or regions, it can be mentioned as National Franchising, if it is done between two countries, it can be mentioned as International Franchising.
B. What is Product and Brand Franchising?
Product and Brand Franchising started as an independent sales relationship between the manufacturer and the seller in the USA. Within the framework of this relationship, the seller company tries to identify itself with the manufacturer company. As a result of the marketing of certain products in independent businesses with a similar appearance, an image merger with the manufacturer is achieved. The basis for this type of franchising is the use of a particular brand or trade name. In addition, the company granting the concession has the right to a wide and continuous audit on the other party, including management and administration. In some simple matters, the franchisee may also enter the production phase. Automobile and truck dealers, gas stations, soft drink producers are the most typical examples of this type of franchising.
C. What is Business System Franchising?
Another type of franchising is business franchising. Here, between Franchisee and Franchisor, not only in the field of product, service and brand, but also all activities related to marketing and production within the business system as a whole. In very simple terms, this type of franchising can be defined as “Selling Mind”. Hotels, restaurants, retail stores, rental and consultancy services are included in this classification. In recent years, the growth rate of business system franchising has been higher than other franchises. The 4 basic elements included in the “Business Format Franchising” contract, which we can call the operating system franchising, are:
Franchisor allows Franchisee to use a specific name or brand owned.
There is an ongoing control over the franchisee throughout the contract.
During the contract, the Franchisor provides certain assistance and services to the Franchisee.
The amount of “Royalty”, which is the form of payment for this privilege, is determined as periodic payments.