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Methods of expanding the business distribution network
Business expansion can occur through a variety of vehicles, the following are some of the methods available.
• Agencies
In this arrangement there is a principal and agent relationship. The fundamental problem with this kind of arrangement is that the agent may be selling only part of the "product". If you develop a more complete operation the full concept of your retail operation would not be being utilised.
• Distributors
Distribution agreements can often be for a fixed term but are very often terminable on "reasonable notice". There are many elements in distribution agreements which are the same or similar to franchise agreements. Many of the same principles apply. The real element which is missing is that the distribution system is not fully exploiting the full retailing package. It concentrates on the sale of goods rather than the exploitation of a marketing image.
• Licensing
You could authorise manufacturers to make and supply the product and use the trade mark for which you would receive a royalty. Again this will not be exploiting the full benefit of a successful retail operation.
• Franchising
If the real success of your business is in the packaging of the product presentation, trade name, trade marks, service marks, the service you provide, the image, the distinctive appearance of the premises, promotional indicia including get-up logos etc and the owner operator enthusiasm and personal attention, then franchising may be the best option. It is that business format which can be made available throughout New Zealand to individually owned franchise outlets.
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