Franchising in Serbia Business concept for economic development and development of entrepreneurship...
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Franchising in Serbia Business concept for economic development and development of entrepreneurship in Serbia Presenters: Goran Sečujski Miodrag Kušić (RE/MAX) FTN November 13th, 2007 Universitiy of Novi Sad UNESCO Chair of Entrepreneurial Studies
Franchising in Serbia Business concept for economic development and development of entrepreneurship in Serbia Presenters: Goran Sečujski Miodrag Kušić
Franchising in Serbia Business concept for economic development
and development of entrepreneurship in Serbia Presenters: Goran
Seujski Miodrag Kui (RE/MAX) FTN November 13th, 2007 Universitiy of
Novi Sad UNESCO Chair of Entrepreneurial Studies
Slide 2
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- Franchising in Serbia Franchising terms and types Franchising in
Serbia business concept for economic development and development of
entrepreneurship in Serbia RE/MAX case study
Slide 3
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- Part 1 FRANCHISING (terms and types)
Slide 4
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising -Franchising 4 issues: Economic issue Legal issue
Franchisor issue Franchisee issue
Slide 5
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Franchising Economic Issue -The aim of
presentation how franchising could help economic development of
Serbia -Positive social-economic impacts of franchising
-Franchising type of vertical cooperation -Business concept on
basis of cooperation between producers, wholesale and retail
Slide 6
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Franchising Legal Issue -Franchise agreement the
most important document to regulate relationship in franchising
network -First franchise agreements up to 3 (three) pages -Todays
franchise agreements more then 50 (fifty) pages -Franchise
agreement complex agreement (licence, know-how) -In USA 70s The
Code of Conduct -UFOC (Uniform franchise offering circular) general
terms
Slide 7
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Franchising Franchisor and Franchisee Issue
-Strategic decision -Franchisor: decision to form franchise
network, procedures, training, control, copyrights... -Franchisee:
decision to buy a franchise, franchise fee/royalties, level of
franchisor control... -Advantages and disadvantages
Slide 8
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Frranchising Advantages and Disadvantages for Franchisor
Advantages: minimum capital potentially high growth rate highly
motivated and dedicated local management lower administrative costs
continuous protection of trade mark faster establishemt of national
brand. Destroys competition Disadvantages: risk of independence
tendency at franchisee standard control no control over franchisees
empleyees
Slide 9
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Advantages and Disadvantages for Franchisee
Advantages: lack of knowledge compensated with training legaly
independent company lower risk of failure (comparing to strarting
own business) less starting capital use of brand name standard
products and quality ongoing professional help group purchasing
discounts Disadvantages: not completely independent constant
compliance with the agreement and standards ongoing financial
obligations (royalites, advertising fees)
Slide 10
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Common Terms Taken from An Introduction to
Franchising
Slide 11
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Common Terms -FRANCHISE from French word franchir
which means privilege or rights. -Definition licence that gives
franchisee rights to sell products/services of franchisor using
franchisors trade/service mark and its business experience. For
this rights franchisee is obliged to pay franchise fee/royalites
and the franchisor has right to control the use of given
rights.
Slide 12
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Common Terms -FRANCHISING contractural form of
vertical marketing system in distribution -Method of market
expansion utilized by a successful business entity wanting to
expand its distribution of services or products through retail
entities owned by independent operators using the trademarks or
service marks, marketing techniques, and controls of the expanding
business entity in return for the payment of fees and royalties
from the retail outlet. (Erwin J. Keup 2004 Franchise Bible,
Entrepreneur Press)
Slide 13
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Common Terms -Franchise agreement legal contract
which tells franchisor to perform periodic deliveries and service
activities, and to transfer its know-how to franchisee. The
franchisee is obliged to pay fees and to perform according to
contractual stipulations.
Slide 14
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Common Terms -FRANCHISOR legally independent
entity which developed brand and unique concept due to business
experience in an industry. This concept could be transfered to
another legally independent entity. -FRANCHISEE legally independent
entity that gets the right from the franchisor to do business under
franchisors trademark, for which franchisee pays fee.
Slide 15
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Common Terms -FRANCHISING SYSTEM or FRANCHISING
NETWORK relationship between franchisor and its franchisees.
Slide 16
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Types of Franchising 1. Product distribuion
franchising 2. Business format franchising
Slide 17
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Product Distribution Franchises -Isaac Singer
& Singer Sewing Machine Company second half of XIX century
-Dealership network -Local businessman - exclusive rights to sell
sewing machine -First franchise agreement -Coca-Cola, General
Motors, Ford Motors...
Slide 18
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Product Distribution Franchises -Franchising of
first generation -Franchisee sells product using producers trade or
service mark -Soft drink distributors, automobile dealers and gas
stations -1/3* of US retail through franchise units *1/2 of US
retail - updated
Slide 19
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Business Format Franchises -Most common type of
franchise -Franchisee sells products/services of franchisor using
its trade/service mark and business concept -Copy capable concept
-Service sector fast food restaurants, business services,
maintenance, hotels, tourism, real estate...
Slide 20
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 1. Franchising Single-unit and Multi-unit Franchise -Two other
types of franchises -International franchising -Single-unit
franchise the franchisor grants a franchisee the rights to open and
operate one franchise unit -Multi-unit franchise a) area
development franchising b) master franchising
Slide 21
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- Part 2 FRANCHISING IN SERBIA (business concept for economic
development and development of entrepreneurship)
Slide 22
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 2. Franchising in Serbia National Franchise Networks -Between
15-20 domestic franchise networks -No evidence about exact number
of franchise units -Product distribution franchise the most common
type of franchise in Serbia
Slide 23
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 2. Franchising in Serbia National Franchise Networks
Slide 24
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 2. Franchising in Serbia National Franchise Networks
Slide 25
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 2. Franchising in Serbia International Franchise Networks
Slide 26
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 2. Franchising in Serbia International Franchise Networks
Slide 27
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 2. Franchising in Serbia First Franchising Conference -The First
Franchise Conference April 11th 2007 -Milan Parivodi, Slobodan
Milosavljevi, Michael Polt, William LeSante (vice president of
Global Marketing Committee IFA) -Subject: franchising basics, how
to buy a franchise, how could franchise help Serbian economy
-Summary: franchising is not developed in Serbia -AMCHAM & IFA
offered help
Slide 28
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 2. Franchising in Serbia First Franchising Conference -Report
Serbia: Franchising Market -Serbia: One of the largest markets in
the region after Romania Increase in purchasing power Western
products and services highly valued Local laws in compliance with
EU laws No limitations for US franchises
Slide 29
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 2. Franchising in Serbia Business Concept for Economic
Development of Serbia -Franchising is not a guarantee for success
-Serbia has advantages in agriculture and service sector -How
franchising could help: 1) Cut unemployment rate 2) Small retail
shops under big supermarket chain umbrella 3) New national
franchises, spreading both nationaly and regionaly
Slide 30
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 2. Franchising in Serbia Franchising and Unemployment -High rate
of unemployment -Franchising advantages avoiding begginers
mistakes, no previous experience needed -Higher success rate of
franchisees compare to starting own business -Serbia Development
Fund financing start-ups
Slide 31
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 2. Franchising in Serbia Small Retail Shops and Supermarket
Chains -Owners of small retail shop compete with strong competition
(Rodi, Mercator, Delta, Metro...) -Entering into franchise sistem
(npr. DIS, DELTA MAXI/PEKABETA) small retail shops have advantages
group purchases, discounts, common marketing, no entrance fees -If
you can not win, join.
Slide 32
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 2. Franchising in Serbia New Franchise Networks -Everyone could
name at least 1 national company that could be franchisor
-Advantages: market expansion in Serbia and in region, brand,
employment
Slide 33
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 2. Franchising in Serbia What are The Next Steps? -Franchising in
Serbia is obviously existing -Franchise is not legaly regulated (it
is only once mentioned in Antitrust Law) -Franchising is not
limited by any law -Suggestion: promoting franchising (state
agencies, banks, individual initiatives), establishing one national
association, Code of Ethics
Slide 34
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 2. Franchising in Serbia Something is Rolling... -2007 is turning
point for franchising promotion in Serbia: First Franchising
Conference Rise of internet sites promoting franchising in Serbia
National Chamber of Commers published brochures and preparing
seminars in 2008
Slide 35
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- PART 3 RE/MAX Mr. Miodrag Kui, Regional Manager for Serbia and
Montenegro
Slide 36
UNESCO Chair of Entepreneurial Studies - Franchising in Serbia
- 3. RE/MAX Case Study -RE/MAX leader in real estate market in USA,
Canada and other competitive markets -Established in 1973 -121000
agents in 67 countries -Sales over 1 million real estates for a
year -The best of the best -The fastest growing franchises 11th
place; The most affordable franchises 4th place; The best world
franchises 9th place -In the book 50 Companies That Changed the
world by Howard Rothman