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Franchise what is it?
Term franchise is derived from French and literally
means the ability to grant a right or exemption.
Definition: "A licence granted by the franchisor to operate a particular business using the franchisor's name, where the franchisor provides assistance to the franchisee, exercises continuing control and receives periodic financial consideration from the franchisee for the services provided."
The first modern day franchise was developed by the
Singer Sewing Machine Company in the United States in
the 1860s, but it was not until the 1970s that the system
became better known in New Zealand with the growth of
fast food chains eg KFC and McDonalds.
Overseas comparisons
indicate that franchising is the fastest growing form
of retailing with 50% of merchandising sales in the
United States attributable to franchised businesses.
The comparable figure in New Zealand is about 15%.
The
growth rate of franchising in New Zealand is approximately
25% per annum, the growth of franchising has been dramatic
and its growth is predicted to increase in the future.
The potential for growth in New Zealand of franchising
is enormous.
By the end of the decade, this powerful
method of distributing goods and services is expected
to generate more than US$1 trillion in worldwide sales
[William Baltz, a US franchise consultant].
The U.S. Department of Commerce predicts by 2010 the proportion
of businesses operating under some form of franchise
system will be one in two. |
