Marketing Franchising can be characterized as follows:
the franchisor provides the franchisee with the exclusive rights to sale the
produced products. Selling of these goods should be carried out in a certain
area and under the franchisor’s brand. Manufacturers use marketing franchising
when they need to build an extensive distribution network which will work under
their control. The points of sales (warehouse, shop, database, etc.) in this
type of relations are independent business of franchisee, so that he is a
partner of manufacturer he cooperates with.
This type of relations is quite attractive for retail
outlets owners as it has some advantages. The commercial network which sells
supplied products is established and coordinated by the manufacturer. In this
form of cooperation retailers (franchisees) deal directly with the manufacturer
(franchisor) passing by all kinds of intermediaries and that is favorably
effects on the financial side of business. They use extra privileges in
addition – staff training directly in the manufacture, access to all the
necessary materials, advertising support of the product etc.
Using this franchise scheme, the manufacturer
distributes its products through a narrow distribution channel as a rule, it
means through authorized retailers or dealers only. That is why besides
previously mentioned advantages the franchisee also uses a certain product
exclusivity, which leads to increased demand in its turn (consumer can purchase
product from a certain vendor only).
We can find Marketing Franchising examples in almost
any area of trade; with the help of this system the essential goods the same as
automobiles and other luxury items can be distributed.