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What
is Franchising
Is a method of marketing and distribution whereby a company
(called the franchisor) expands nationally or internationally
by granting a person or company (called the franchisee) the
right to operate a copy of its business in another geographic
area. The right will usually include the ability to use the
name, the business system and the know-how of the franchisor.
The
franchisor gains his or her income from initial and ongoing
fees paid by the franchisee. In return, he or she must provide
a variety of services to encourage the continuing profitability
and growth of the franchisee’s business.
The
franchisee pays to set up the business in their area and is
the owner of their own business. They receive their income from
successfully marketing a desirable product or service under
a promotable brand name.
Is
Franchising Reputable?
Franchising
has proved to be one of the most dynamic business methods of
the past 50 years. It enables companies which have a good product
or service to expand faster because they are using the capital,
local knowledge and commitment of individuals who are in business
for themselves.
It
gives those who wish to be self-employed the ability to go into
business properly trained and equipped, with the security of
a well-proven product and system beneath them.
Franchising
is a reputable part of daily life in New Zealand. Many of our
best-known brands are actually franchises: Lotto, Stirling Sports,
Robert Harris, Cash Converters, Green Acres, Paper Plus, The
$2 Shop and, of course, McDonald’s. Franchising should
not be confused with ‘pyramid selling’ or network
marketing.
How
Big is Franchising in New Zealand?
According
to the 2003 Survey of Franchising organised by the Franchise
Association, the sector is worth over $6.9 billion. There are
over 350 franchise systems in New Zealand (74% of them home-grown),
and almost 5,000 operating units. Franchising employs over 40,000
people.
Source:
Franchise Association of New Zealand
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