Franchising systems exist in a
few models and are classified due to the group of participants:
Producer with producer
- Producer with wholesaler
- Producer with retailer
- Wholesaler with wholesaler
- Wholesaler with retailer
- Retailer with retailer
1. Producer
with producer
Above mentioned relations may
be deeply considered on the following example. The company is supposed to work
out and patent new production technology which allows to reduce expenses up to
25%. Other corporations may also want to use a similar method of production.
Just from this moment
relationships may arise. Firms use the license with the granted right to
practice the stated technological process, and company-innovator gets definite
commission compensation known as royalty. In this case, franchisor represents
himself as a licensor while the franchisee is the licensee. But at even such
kind of communications the franchisee doesn’t lose his autonomy. He is
practically authorized with the whole range of free activities (the procedures
and policy isn't regulated, and as however technological equipment).
2. Producer
with wholesaler
This kind of relations are
well looked through in the operation of the major manufacturing soft drink
companies. They grant the franchisee the right to use the syrup concentrate
which they produce themselves.
3. Producer with retailer
This is a franchising system
of the first generation which arose at the very beginning of automobile
construction. Dealer networks were the manufacturers of automobile which were
founded on the principle of franchising. Petrol producers and fuel filling stations
were working similarly.
4. Wholesaler with wholesaler, wholesaler with retailer
These categories have no sharp
definition, but as a matter of fact they differ less from the relations of the
producer with the retail seller.
5. Retailer with retailer
Most of such agreements are
concluded when a major trade firm-franchisor makes decision to expand its sales
system like this.
6. Serving company with serving company
In these relations the
franchisor acts as the extension of the franchisor.
