Franchising as a device of marketing policy

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Описание работы

In recent years, a huge number of enterprises operating under the names of well-known domestic and foreign companies. Since it is obvious that the creation of a network of branches or representative offices would require a longer period of time and considerable investment, we can assume that in this case there is a new way of organizing the business, allowing Russian companies to use the well-known brands. This method is franchising.
Today Russia is no surprise in goods and services designated famous trademarks of such companies as "Coca-Cola", "Adidas", "Xerox", "Shell", "McDonalds" and many others. These marks clearly we associate with certain manufacturer that has a high reputation, and indirectly indicate the high quality of goods and services. One of the most efficient distribution channels through which these goods are distributed within and around the world, is also a franchise.

Содержание работы

Introduction………………………………………………………..…………………...3
Chapter 1. Franchising as a device of marketing policy
The development of franchising…………………………………………………5
Nature and types of franchising………………………………………………….8
Chapter 2. The study of franchising as an example of «Subway»
2.1 Characteristic of the company «Subway»……………………………………...15
2.2 Features franchise in the company «Subway» in Russia……………………….17
Conclusion……………………………………………………...………………..........22
Literature……………………

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Russian law relationships arising under the contract of franchise, governed by Chapter 54 of the Civil Code. Chapter 54 "Commercial concession" of the Civil Code includes the following articles:

  • Article 1027 Civil Code. The contract of franchise
  • Article 1028 Civil Code. Form and registration of franchising agreement
  • Article 1029 Civil Code. Commercial Subconcession
  • Article 1030 Civil Code. Award the contract of franchise
  • Article 1031 Civil Code. Duties of owner
  • Article 1032 Civil Code. Duties of the user
  • Article 1033 Civil Code. Restrictions on the rights of the parties under the contract of franchise
  • Article 1034 Civil Code. Liability of owner of the requirements of the user
  • Article 1035 Civil Code. User's right to conclude an agreement of commercial concession for another term
  • Article 1036 Civil Code. Changing the agreement of commercial concession
  • Article 1037 Civil Code. Termination of the contract of franchise
  • Article 1038 Civil Code. Saving the franchising agreement in place with a change of parties
  • Article 1039 Civil Code. The effects of changes of company name or commercial designation holder
  • Article 1040 Civil Code. Consequences of termination of the exclusive rights have been granted use of the contract of franchise

According to the agreement of commercial concession one party (the owner) shall provide the other party (the user) fee for a period or without specifying the period of the right to use in business by a set of exclusive rights belonging to the holder, including the right to brand name and (or) the commercial designation owner, the protected commercial information, as well as other facilities provided by the contract of exclusive rights - trademark, service mark, etc. The contract provides for the use of franchise system of exclusive rights, business reputation and business owner experience in a specific volume (in particular, with the establishment of minimum and (or) the maximum amount of use), with or without the use of territory in relation to a specific area of ​​business activity (sales of goods obtained from the copyright holder or produced by the user, the implementation of certain trading activities, works and services). Parties to the contract of franchise may be commercial organizations and citizens registered as individual entrepreneurs.

In Russia, the franchise does not always imply the use of franchising agreement based on its legal basis. Under the franchise agreement may be concluded the following: the contract of franchise, contract delivery, agency, licensing, trade credit, custody, sale, and a number of others.

 

Chapter 2. The study of franchising as an example of the company «Subway»

Although the "McDonald's" first set foot on Russian soil, but a classic in the field of franchise fast food has brought us another U.S. operator of fast food - Subway.

Subway - the world's largest fast-food restaurants, which works on the principle of franchising. The main products are selling sandwiches and salads.

The official name of the company, providing services franchise: Doctor's Associates, Inc. The company was founded in 1965 by Fred De Luca and as of April 1, 2012 has 36,634restaurants in 100 countries (Figure 3).

Figure 3. The development of the company «Subway» in the world

 

The history of fast food chain «Subway» started in 1965, when 17-year-old Fred De Luca opened his first shop selling sandwiches. Co-founder and investor of the project was Peter Buck, a friend of Fred's parents. The first institution of the network was opened in Bridgeport, Connecticut. Booth called the "Super Submarines Pete", as prepared by the sandwich looked like a submarine. A few years later the name was changed to «Subway Sandwiches and Salads." The company was originally used to expand the franchise business. And today, its uniqueness lies in the fact that «Subway» worldwide franchise developed exclusively as a project. In other words, the trademark owner does not have its own restaurant and all the restaurants «Subway» belong to their owners in the franchise.

Every customer in the restaurant «Subway»  hands, "the master of sandwiches," creates his own sandwich. This process begins with the selection of one of the five varieties of freshly baked bread aroma. Visitors are offered a wide choice of toppings - combinations of cold cuts, steak, pork, chicken, tuna, seafood, mushrooms, cheese, etc. Each sandwich includes a set of fresh vegetables and special sauce Subway in any desired combination. To perfect my sandwich can toasting it in the oven TurboChief ®, while cutting the meat warm up, and the bread will become crisp and fragrant!

«Subway» offers its wide range of choices of restaurants to eat quick, tasty, and, most importantly, useful. Subway has positioned itself as a healthy alternative to fast food restaurants networks, which is reflected in the slogan of "Eat fresh!" (English Eat fresh!). The global mission of Subway - to be number 1 in the world in the field of customer service and to develop a chain of restaurants in the world.

Subway system is easily adaptable to different cultural traditions, tastes and is popular not only in Western countries, but also in China, Japan, India, Brazil, Mexico, the Arab countries and Israel. Our sandwiches contain a minimal amount of fat.

In the menu there are always low-calorie sandwiches. A typical Subway restaurant is a small room with a transparent stand, inside which are the ingredients for the sandwiches. Behind the counter are oven baked bread in which the sandwich. In the restaurant is usually not a lot of seats, as in other fast food restaurants (about 10-15), some restaurants some of them (sometimes all) in the form of a narrow table along the wall and bar stools. In restaurants, «Subway»  no kitchen and the whole process of making sandwiches and salads passes directly in front of the customer.

The system «Subway» all restaurants are divided into traditional and nontraditional, depending on location. Traditional street restaurants are all located on the first floor and having a separate entrance. 
To include all the non-traditional restaurants, client flows are generated by other businesses. This institution, located in the food courts of shopping centers, airports, hospitals, schools, bus stops, gas stations or other areas related to activities other than the restaurant business.

The quality of products used to create a sandwich «Subway», and the whole process of forming a sandwich tightly regulated and standardized throughout the world. So you can be sure that, having come to any restaurant «Subway» anywhere in the world, you get exactly what you expect - delicious fresh "sub" with your favorite stuffing.

 

 

2.2 Features franchise company «Subway» in Russia

 

Companies "Subway Russia" took five years to withdraw the Russian market in the fourth place in Europe for existing restaurants (Figure 4). The company plans until the end of 2015. bring this figure up to 1000!

 

Figure 4. Development company  Subway  in Russia

 

As the pace of sales growth, profitability and market performance of individual restaurants Subway in Russia among the top five national markets in the Subway, aRussian restaurant Subway, located in St. Petersburg, on Nevsky Prospekt, is one of the best in terms of sales.

The company «Subway» offers favorable conditions for cooperation and full support to the partners. The franchisor provides the right to sell branded goods «Subway» franchisee - someone who wants to create their own business. License agreementallows the franchisee to use the methods of manufacture of the product. Franchisegranted for 20 years. 
The franchisee buys the right to operate franchises (Fig. 5). The first franchise fee is $12,000.

Figure 5. Payments to franchisees

 

Also, franchisees, under the terms of the contract, shall:

  • find a room in which experts estimate will be directly involved Subway;
  • pay the first franchise fee;
  • chosen to rent or buy premises;
  • repair the selected premises in accordance with the allocation plan developed by the restaurant;
  • procure the necessary equipment;
  • hire staff;
  • manage the restaurant in accordance with the standards of SUBWAY ®;
  • list the monthly royalties - 8% of the turnover of the restaurant;
  • use a standardized brand «Subway», the menu, interior design and control system.

The total cost to open a restaurant is about $ 100,000 - $ 150,000.

 

Duties of the franchisor:

  • Give the formula of sandwiches, salads and rolls, as well as instructions on how to manage the restaurant and food handling;
  • Assist in identifying and assessing the premises;
  • lead the development plan for placement and design of the restaurant; 
    • to train the franchisee and his management staff to conduct initial training of staff;
  • provide personal assistance during the opening and after opening the restaurant.

Franchisee shall operate in accordance with the standards of quality, service, cleanliness. However, franchisees are still opportunities for innovation, for new product development is crucial for any business. Consumer tastes change over time, and the company must respond to these changes.

Each franchisee must undergo a full course of a mandatory training program. In St. Petersburg operates a certified training center of Subway, which in Russian trains franchisees and managers for Russia, CIS countries and former socialist countries. English language center is located in the United States, speaking in German are taught in Germany.

The program for franchisees - 2 weeks for managers - 1 week. Full operational support, quality control, monitoring compliance of the system. System-wide marketing program.

For those wishing to purchase a franchise «Subway», the network itself is already solved many of the marketing and organizational issues. Franchise - a whole program, which includes assistance to franchisees in establishing and developing its own restaurant, its advertising, the brand, marketing and manufacturing technology, and personnel training. As a result of this scheme beginning businessman immediately gets refined to perfection, and proven program of action franchise.

The company makes what should be the consumer and profits by maximizing the satisfaction of his needs. Because of this, in the future Subway sees himself the world's best fast-food restaurant chain and intends to surpass its competitors in quality, service level and customer value.

When the company won the Subway consumer confidence, she continued to improve: it became a more attractive design, gradually introduce new items on the menu (business lunches, desserts). Quick Service Restaurants «Subway» become places of family meals that kids love. The locations of restaurants are convenient for customers and service time was reduced to a minimum, thanks to the efforts of the company applied to improve the technology of preparation.

The company «Subway» to expand the distribution system began to issue licenses for the use of their technology. Thus, the system has expanded beyond the United States. «Subway» acts in the interests of society as a whole, supporting charitable and social projects, educational programs, programs for environmental protection, in addition, all visitors can see clearly that all the sandwiches made from fresh ingredients and freshly baked bread.

The organizational structure of the restaurant «Subway»  apply to linear (Fig. 6). For a linear structure characterized by a clear division of labor and the establishment of a brutal system of generalized formal rules and standards to ensure the implementation of staff responsibilities and coordinate the various tasks, hierarchical levels of management, in which each child is subject to and controlled by the parent, a clear division of labor, which leads to a highly skilled in each area. The structure allows the director to efficiently manage the work of the company and stay informed.

Figure 6. The organizational structure of the company «Subway» in Russia

The strengths of the company are:

  • Leadership in the domestic and international markets;
  • Recognition of institution, its exclusivity;
  • High level of customer service through an established staff, nice interior theme;
  • SUBWAY offers high-quality, healthy, fresh alternative to traditional fast food. The product is made in the eyes of the customer, at his request.

Weaknesses are:

  • Weak monitoring of a network of restaurants;
  • Do not always adhered to the standards for the preparation(for example, instead of bacon, sliced meat);
  • A small assortment.

The main clients of «Subway» is: middle class, leading an active lifestyle, students and children. So, Subway - it is really successful concept for the development of the franchise form of business, but especially because it is based on healthy eating, unlike many other fast food concepts.

 

 

Conclusion

Franchise history and is firmly entrenched in developed countries, exposure to the objective needs of economic development. Moreover, overseas consider this form of not only useful but also prestigious. So if you seek to learn from all the West's perspective, it is hoped that the franchise will soon appreciate in Russia. After all, the idea of franchising is simple - if there is an interesting, extraordinary and promising concept of doing business, you can earn on her own and pass it to another person to carry out their business in exchange for the use of additional revenue and advertising their business. Any franchise system is based solely on the successful business.

In this paper we studied the history of the origin and type of franchise. On the example of quick-service restaurant «Subway» were the features of franchising and the formation mechanism of the relationship between franchisor and franchisee.

Summing up the results of this work the following conclusions:

  1. The Franchise Business is the most preferred for use in power plants, as He suggests various options for cooperation in all areas of business and adaptability to market conditions.
  2. Before making a decision about the early development of franchising in the company a potential franchisor must consider all the "pros" and all the "cons" of the future franchise system, both for ourselves and for future franchisees.
  3. Doing business in the form of franchise should be both beneficial for both the franchisor and the franchisee's potential and future income potential franchisee's business must be divided proportionately among the subjects of franchising. Thus, to be achieved this level of expenditure and revenue to both businesses were profitable to do business together than separately organized company.
  4. Subway - it really is a successful concept for the development of the franchise form of business as well, especially since it is based on healthy eating, unlike many other fast food concepts.

Development of new experiences, the acquisition of new ideas, methods, technologies are always helpful for any kind of activity. That is why Russian business should be legislation to provide legal protection and a guide to action at the conclusion of the internal and international treaties that allow using the franchise system to promote the brand and held technology business in the territory of our country and abroad.

Nevertheless, despite the presence of some inhibitory factors, Franchising in Russia is developing successfully. More and more business circles refers to the use of this efficient form of doing business. However, its significance for the Russian economy is difficult to overestimate: for the franchisor - this is one of the fastest and most effective ways to create a new independent companies united in a single system for franchisees - to develop their own business based on proven business models, and for the state - an effective tool support for small and private entrepreneurship, and, consequently, the development of the entire Russian economy.

 

 

Literature

  1. Bazhenov J.K. Small business: a practical guide for organizations and small business. / J.K Bazhenov, A. Bazhenov - M.: "Marketing", 2005. 
  2. Gordienko I.S Another favorable Stranger: Franchising / IS Gordienko / Food and Society. - 2006. - № 4
  3. The Civil Code of the Russian Federation (Part Two) from 26.01.1996 № 14 FZ(as amended from 30.11.20011), chapter 54.
  4. Panin, M.F Active phase of the development of franchising in Russia / M.F Panina / /Dengi. 2006.
  5. Raizberg, B.A Modern Dictionary of Economics / B.A Raizberg, L.S Lozovsky, E.B Starodubtseva.- Moscow: INFRA-M, 2007
  6. Official website of the company «Subway» http://www.subway.ru/
  7. Official website of the company «Nestle» http://www.nestle.ru/
  8. http://www.franchisinguniverse.ru/
  9. http://www.unitcon.ru/
  10. http://www.franchising.co.il/ Franchising Code of Ethics
  11. http://www.slovar-ekonomiki.ru/
  12. http://www.managment.aaanet.ru

 

 


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