The regional franchising
represents a form of a franchising business organization in case of which the
franchisee is entitled to develop a certain area and to control again opening
companies (but at the same time there is a stipulated schedule for company
openings and about their quantity). Firms newly opened in such a way, aren't
endowed with an independent legal status, but are only branches or departments
of the franchisee.
At the moment franchisees
began to appear in many regions who possess not a single, but several
franchises. Besides recently the regional franchising became quite a popular
form of business. In many cases it was affected by the development of Chain
Stores. Due to the global statistics, just conceptual shops have big efficiency
in Russia.
Making his final choice on
regional franchising, the businessman sets as an object to cover the determined
geographical area by his business (city, region, country and etc.). At the same
time he realizes that he has no necessary financial resources or a group of
people which would help him only develop his own business by the expected
growth rate. In connection with this, he needs a person whom he would be able
to rely on. And that person becomes the main franchisee who is endowed with the
definite rights and obligations.
On the one hand he can himself
choose a new franchisee on his trusted area, on the other hand he carries
out original curriculum among beginners and holds other events which are
usually done by franchisor. And at last, he makes use of all blessings inherent
to franchising, for which he should make license payments and should pay
royalties immediately to his franchisor.
A complete contract is made
between the main franchisee and franchisor in which all rights and obligations
of both sides are depicted in detail, the period during the franchisee will
lead this activity is also specified.
At the starting point the main
franchisee pays license payments to his franchisor for using that kind of
business, and subsequently begins to receive royalty. The growth of payment
strictly depends on the activity of beginners assigned into franchising system.
This method of co-operation is
profitable for both sides of franchising system.