Franchising Business: A business model involving licensing of brand-name, trade mark and method of business/technology. There are 2 entities in this model:
1. Franchiser: Company which provides business model, technology, brand name and receives the royalty from franchisee for this offering. If you have an established business/unique technology/brand name, this is the fastest model to expand your business.
2. Franchisee: Person/Company which does the business using franchiser's brand name and business model. When you are planning to start new business without much investment and don't have plans to grow very big you can take the franchising of an established brand. This reduces your risk, investment on Research and development and guaranteed ROI as its a proven business concept.
Dealer-Distributor model: Method of selling the product/solution through existing dealer-distributor network. Dealer/Distributor gets some percent of commission for selling the goods and Manufacturer decides the final price of the product.
Distributor buys the product in bulk from the manufacturer and sells it to dealer who is a retail seller/sells goods to customer.
Though both franchising and Dealer-distributor models are methods for expanding a company's business rapidly, choosing the right solution depends on your business.
Franchising model is best suited -
- when you have multiple products
- when you have unique technology which cannot be copied easily without high investments, long development cycle, large investment on research and development.
- Need to build franchisee network (can use 3rd party services to build the franchisee network. eg: teamindiamangers)
Dealer-Distributor network can be used for selling your product
- When you have fewer products
- better way to sell by making use of the existing network
Franchising model reduces your headache of customer service and responsibility of marketing and sales. Franchisee is a small entrepreneur who is enthusiastic about the business. He believes in your business model and invests his money hence you need to give certain commitments to make his business work.
Dealer/Distributor doesn't worry about your business and is only interested in the commission he gets on your product. Hence you have to take complete responsibility of expanding the business.
Hence think building the franchisee network is beneficial when you have enough business, established model and resources to satisfy the crying baby(franchisee).
Commit only if you are able to satisfy it!!!
No comments:
Post a Comment