Franchising as a device of marketing policy

MINISTRY OF EDUCATION AND SCIENCE

FEDERAL AGENCY FOR EDUCATION

BORIS YELTSIN URALS FEDERAL UNIVERSITY

 

 

DEPARTMENT OF MANAGEMENT

 

 

 

 

 

 

 

Topic: Franchising as a device of marketing policy

(an example of «Subway»)

Subject: «Entrepreneurship»

 

 

 

 

Student: Barkeeva U.A.

Group: EM-391902

Lecturer: Yazovskikh E.V.

 

 

Ekaterinburg

2012

Content

Introduction………………………………………………………..…………………...3

Chapter 1. Franchising as a device of marketing policy

1. The development of franchising…………………………………………………5
2. Nature and types of franchising………………………………………………….8

Chapter 2. The study of franchising as an example of «Subway»

2.1 Characteristic of the company «Subway»……………………………………...15

2.2 Features franchise in the company «Subway»  in Russia……………………….17

Conclusion……………………………………………………...………………..........22

Literature…………………………………………………………...………................24

 

Introduction

In recent years, a huge number of enterprises operating under the names of well-known domestic and foreign companies. Since it is obvious that the creation of a network of branches or representative offices would require a longer period of time and considerable investment, we can assume that in this case there is a new way of organizing the business, allowing Russian companies to use the well-known brands. This method is franchising.

Today Russia is no surprise in goods and services designated famous trademarks of such companies as "Coca-Cola", "Adidas", "Xerox", "Shell", "McDonalds" and many others. These marks clearly we associate with certain manufacturer that has a high reputation, and indirectly indicate the high quality of goods and services. One of the most efficient distribution channels through which these goods are distributed within and around the world, is also a franchise.

It can be argued that the franchise is now one of the most effective tools to improve the efficiency of small businesses. It allows you to combine the advantages of small and large businesses. Enterprises receiving advanced technology and support based on the franchise, become more competitive.

Any small business can come up with their brand, register it, but to become a successful company, you need to invest heavily in the creation and promotion of the brand. A broad advertising campaign, participation in exhibitions, active work of marketers. It is not expensive for all businesses. Easier for small businesses to purchase the rights to use the trademark in the solid framework of franchising. In this case, a large company, the franchisor provides the small business needed equipment and technology, organize training, and it undertakes to use the trademark only to the company, independently of where it is - in Russia or America.

As the foreign and domestic practice, the main advantage of franchising - reduction of risks, so that in industrialized countries, types of franchise businesses mainly engaged individuals and small businesses.

At present, the study of franchising is one of the most pressing issues of the Russian economy. Very many of today's businesses have devoted themselves to the subject of study and analysis of the functioning of business in the form of franchising and creating the best conditions for successful development of the franchise system.

The aim of this work: to examine the history and types of franchising, as well as to consider the particular case of franchising in the fast-food restaurant «Subway ».

To achieve this goal it is necessary to solve the following tasks:

1) to study the history and types of franchising;

2) to consider the mechanism of formation of relationships in the franchise system;

3) study the characteristics of franchising as an example of the company «Subway».

 

Chapter 1. Franchising as a device of marketing policy

 

1. The development of franchising

 

Some argue that the franchise has invented the Queen of Spain, in 1492 when she gave Christopher Columbus "franchise" on trade with the New World. Ironically, in this very "New World" franchise has once again started to develop in the twentieth century.

In the U.S., the first real commercial franchise contract is a franchise of "Singer" sewing machines for the production, which has issued its franchise in 1851. To stop the "war on sewing machines," in which four manufacturers chased each other, Isaac Singer and his partner, attorney, Edward Clark, organized the "Association of sewing machines," the first American patent package, distribute among the producers of distribution rights.

Like all successful franchisors Singer was a powerful businessman with a strong business sense. The firm was very successful and easily sell their products. Was created is a very important distribution and marketing concept. This concept has evolved into a modern one franchise, which is known to us today.

Franchising continued to grow as the industrial revolution in the United States has gathered momentum and mass production made it necessary to improve distribution systems.

Franchising in the automotive industry - one of the oldest forms of franchising in the economy. The company "General Motors" had a huge impact on the franchise. Not having sufficient capital to start retail sales, the company began selling its cars through dealers, which is still used in the automotive industry. Among the first franchisee, "General Motors" were the owners of bike shops, which are also engaged in selling cars.

When Henry Ford began mass production of the famous "Model T", he needed an efficient distribution system to deliver their vehicles to the consumer. Like the "GM" Ford did not have enough capital to open a lot of retail outlets within a short period of time, so the company has developed a franchise system dealers wherever possible. Since this system was a success, many car manufacturers have decided to implement the same. Today a significant percentage of sales of franchises account for the automotive industry.

The advantages of the concept of franchising was confirmed after the Second World War in the restaurant and hospitality industries. The first major breakthrough in franchising occurred in the 50s when the big success franchisees of famous fast food restaurants ("McDonald", "Kentucky Fried Chicken," "International House office Penkeyks").

Thus, in 1950 the restaurant industry has quietly begun their revolution, which today we take for granted. Restaurant chains, which had a success, once and forever changed Americans' eating habits, and changed the face of cities, we prove the familiar labels on the franchise fast-food spots that are present in almost every town.

The rapid development of franchising began in the U.S. in the 60s. Revealed a huge number of small hotels, small shops, laundries, dry cleaners, auto service points, restaurants and cafes, fast food, service stations business (photocopiers and photographic prints, fast delivery of correspondence, etc.), beauty salons, repair shops, recreation and entertainment clubs, travel agencies and other small businesses operating on franchise basis.

In 1970, sales of businesses operating on the basis of the franchise, has made more than $ 100 billion, which exceeded 25% of total sales in the U.S. different. In 1975, the amount of franchise has doubled, and in 1990 sales reached 716 billion dollars, more than twice higher than in 1980. The eighties as a period characterized by significant reductions in middle management personnel in major U.S. corporations. In this mid-level managers are ideal candidates for transformation into a Franchise - Franchise buyers. They are usually relatively well educated, have career aspirations, have the skills difficult, hard work, but are not ready to start your own business from scratch. Buying a franchise, former manager of a unique opportunity to combine the vast potential of free enterprise with the daily care franchisor, is vitally interested in the success of the Franchisee.

Today, franchising is the fastest growing method of doing business in a market system. Statistics on business development in developed countries show that over a five year period, more than 85% of small businesses, for whatever reasons, end its existence. During the same period of less than 12% of companies operating in the franchise system, were closed. Thus, of 8-9 newly created franchise businesses only one ceases to exist. According to the International Franchising Association (IFA) every eight minutes of the day in the U.S., a new franchise period.

As for the Russian market, over the past 10 years, it came out and successfully operate such well-known Western franchise systems as "Baskin Robbins", "English First", "Carlo Pazolini", "Kodak", "Sbarro" "Subway", " Xerox ", etc. Along with the development of international franchising domestic franchise systems are gaining increasing market share. Such Russian companies as "Masterfibre", "Econika-shoes ',' Fragrant World", "kopeck", "Ofisprintservis" and other very rapidly develop their franchise business.

It is believed that the first franchise in the Russian territory was sold by "Baskin Robbins", so far successfully developing here for franchising. But in fact, became a pioneer of Russian businessman Vladimir franchise Dougan, who founded the franchise just two companies: "Doc-bread" and "Doc-Pizza." It was he who took up the popularization of this phenomenon among compatriots, published a book, and even became the first Russian to have joined the International Franchise Association.

Prospects for the development of franchising in Russia, the most favorable. Recently, a tendency accelerated development and distribution franchise method of doing business. This improves the quality of the franchise proposals and technologies that are being offered to the transfer, become strong and commercially viable, there are more positive examples of the introduction of franchising. Apparent increase in Russian franchise companies for the period from 1995 to 2010 (Fig. 1).

 

 

 

 

 

 

 

 

 

 

 

years       1995           1998          2000       2001        2002      2005       2007     2008     2009     2010

Figure 1. The number of franchise systems

 

However, unfortunately we can say that the pace of development of franchising in Russia are relatively low compared with developed countries.

Among the specific, negative effects that prevent the effective formation of the Russian franchise market is potentially huge and represents a "no tillage field", include the following elements of a real common business practices:

• the imperfection of legislation,
• lack of business circles of serious knowledge of franchising,
• the practice of tax evasion and the routine use of "shadow" operations - the practice of non-fulfillment of obligations between the partners,
• excessive bureaucratic regulation of business and bribery.

 

 

1.2  Nature and types of franchising

 

The term «franchising» comes from the French word franchise means ""privilege", translated from the German franchise - a form of sales of goods in retail trade, at which the manufacturer has the right to sell its goods dealer licenses.

Some economists are considering franchising as a "system of promotion in the market for goods and/or services, and technologies, which is based on close and continuous collaboration between legally and financially independent parties - the franchisor and the franchisee."

In this case the franchisor - it is a large parent company, which conveys certain rights, including the right to use the trademark. Franchisee - a small company that gets the contract certain rights, including the right to use the trademark. The contract between these parties is the franchise, according to which:

a) The franchisee shall be entitled to participate in business deals, sale, or distribution of goods or services to market the plan or system prescribed in substantial measure the franchisor;

b) a franchisee's business is associated with a trademark, service mark, trade name, logo, advertising or other commercial symbol, developed by the franchisor or its affiliate;

c) The franchisee is required to pay, directly or indirectly, a franchise payment.

Organizer franchise - the franchisor who owns a certain brand and know-how - provides franchisees - small business, a part of a franchising network - the right to conduct business under its brand name, brand design, marketing techniques and a variety of goods and services. Franchisees, which is an independent economic entity, the franchisor agrees to comply with established standards for quality products and services, as well as technology manufacturing and service operations, to pay adequate remuneration and provides the franchisee the right to control it.

Interaction with members of the franchisor's system can be done either directly with the franchisee or through one or more subfranchayzerov.

An important component of success is a clear and thorough knowledge of the essence of the entrepreneur franchise, the variety, structure, benefits and possible risks when using it. Franchising can be defined as a way to deliver products or services to the consumer a way to conquer the market, based on co-operation of material resources and efforts of various companies.

At its core franchise - this is a temporary transfer of intellectual property rights to another company, which is based on the franchise agreement. As a result of this transaction will be implemented by the franchisee products or services of a certain brand, owned by the franchisor. We can say that franchising is a sale of intangible assets of the franchisor.

The contract specifies the franchise fee as a down payment and monthly payments (their sum), after which the franchisee receives the right to use the company name, reputation, marketing tactics, and many others provided in the contract. In addition, the franchisor also has benefits - it develops its own brand and attract more foreign investment, reducing its own investment in the business. Classification of franchising at this stage varied (Table 1).

Table 1

Classification of franchising

№	Classification attribute	Type of franchise
1	By the number of franchises	- franchise individual enterprise; - a corporate franchise.
2	By franchising strategy to expand business	- classic franchise; - conversion franchising; - a child of franchising; - franchise-contract management.
3	By the nature of the object of franchising	- trade franchise; - production franchise; - a business franchise.
4	The structure is build franchise network	- an individual franchise; - regional Franchise.
5	In place of the franchisee in the structure of supply channel	- the system of the "producer - retailer '; - the system of the "producer - wholesaler"; - the system of the "wholesaler - retailer"; - the system of the "provider of services - the retailer."

 

The most common types of franchise are depending on the nature of the activity, ie marketable, productive and business franchises. Consider the nature of these types of franchising.

Product franchising is a transfer of exclusive rights to sales of products manufactured by the franchisor under its trademark in a particular area. Franchisee is the only seller of the goods at a fixed territory and the exclusive representative of the franchisor's trademark. The main condition of this transaction is that the franchisee agrees to buy products only from their franchisor and refuses to implement similar products of other firms that can compete. Thus, for a typical commercial franchising specialization franchisees to implement one type of goods and services and receive a fixed share of total sales. He was also characterized by relatively low degree of regulation of duties due to the homogeneity of activity. Using the trademark franchise, the franchisor does not only increase sales of their products, but also regulates, by securing for the franchisee certain areas, the distribution of sales between the different regions, expanding the geographic market.

The main differences between the trademark and franchise dealership are great affection for the franchisor's trademark, the exclusive marketing of products, a larger amount of the provision of various services to the franchisee the franchisor: advertising support in the national press, discounts on goods purchased, training and consultancy in the process.

The production is a transfer of franchise franchisor rights to manufacture and market under their brand name products, using patented technology, materials, raw materials or source component production.

In this scheme, the major manufacturers are working soft drinks (eg, «Coca-Cola», «Pepsico», «Shweppes»), the company's food production («Mars», «Nestle», «Danone»), the company producing cosmetics and household («Henco», «Procter & Gamble»). Most of these companies, in addition to franchise relationships, become co-owners, investors (eg, «Nestle» owns a controlling stake in the chocolate factory "Russia" - Generous Soul ").

Business Franchise (business format franchising) is the most popular and promising way of franchise, since it involves not only the transfer of a trademark, but the technology business.

Application of the business of franchising is typical for catering (and others). In this case, the franchisee undertakes to act in accordance with the franchisor's marketing strategy, with its rules of planning and management organization, to comply with technical requirements, standards and conditions for quality assurance and participate in training programs and the development of entirely responsible for the economic results of their work . In Russia, the franchising business use: fast-food companies («Mcdonald's», «Subway», «Baskin Robbins», «Grillmaster», «Rostik", "Russian Bistro», «Kentucky Fried Chicken»), photo salons ("Kodak" ), copy centers ("Xerox"), shopping ("Pyaterochka", "kopeck", "The Seventh Continent», «Reebok», «Nike», «Ives Rocher»)

Franchise agreement is accompanied by a package of documents which detail to describe the technology business. Provides detailed guidance on the selection of real estate (location, rental price), the interior design (colors, style of furniture, lighting), training (training, compliance officer, the style of behavior, uniform). Common parameters are kept in production, advertising, politics, relationships with suppliers, record-keeping.

The franchisor provides financial, technical, information, support and carries out continuous monitoring of compliance with all conditions of a franchise agreement.

When a business franchise requires that franchisees paid regular contributions and make contributions to the advertising fund, administered by the franchisor. Franchisor may lease the fixed assets of the franchisee, to offer him funding, he is also entitled to speak and as a provider for its franchisees.

Thus, the business franchise - a franchise of an activity that is the inclusion of a small business in a full economic cycle of production and large corporations. Compare the main types of franchising (Table 2).

 

 

Table 2

Comparative characteristics of main types of franchising

Kind of franchise	Type of franchise	Value	Limitations
Product franchising	Product	This type of franchising is simple to use	Franchisee operates in a limited sphere of activity specialization
Manufacturing franchising	Technology / base component	Franchisor to easily control the franchisee, high efficiency	Require large start-up costs for the purchase of a franchise, the franchisee is highly dependent on the franchisor
Business Franchise	The model franchise business	Great scope, fast adaptability to market conditions	Initiative is often suppressed franchisee excessive regulation of

 

On the basis of the considered table, we can conclude that from all kinds of franchise and the most profitable franchise business is preferred, since the broad scope and rapid adaptability to market conditions.

Russian law relationships arising under the contract of franchise, governed by Chapter 54 of the Civil Code. Chapter 54 "Commercial concession" of the Civil Code includes the following articles:

• Article 1027 Civil Code. The contract of franchise
• Article 1028 Civil Code. Form and registration of franchising agreement
• Article 1029 Civil Code. Commercial Subconcession
• Article 1030 Civil Code. Award the contract of franchise
• Article 1031 Civil Code. Duties of owner
• Article 1032 Civil Code. Duties of the user
• Article 1033 Civil Code. Restrictions on the rights of the parties under the contract of franchise
• Article 1034 Civil Code. Liability of owner of the requirements of the user
• Article 1035 Civil Code. User's right to conclude an agreement of commercial concession for another term
• Article 1036 Civil Code. Changing the agreement of commercial concession
• Article 1037 Civil Code. Termination of the contract of franchise
• Article 1038 Civil Code. Saving the franchising agreement in place with a change of parties
• Article 1039 Civil Code. The effects of changes of company name or commercial designation holder
• Article 1040 Civil Code. Consequences of termination of the exclusive rights have been granted use of the contract of franchise

According to the agreement of commercial concession one party (the owner) shall provide the other party (the user) fee for a period or without specifying the period of the right to use in business by a set of exclusive rights belonging to the holder, including the right to brand name and (or) the commercial designation owner, the protected commercial information, as well as other facilities provided by the contract of exclusive rights - trademark, service mark, etc. The contract provides for the use of franchise system of exclusive rights, business reputation and business owner experience in a specific volume (in particular, with the establishment of minimum and (or) the maximum amount of use), with or without the use of territory in relation to a specific area of ​​business activity (sales of goods obtained from the copyright holder or produced by the user, the implementation of certain trading activities, works and services). Parties to the contract of franchise may be commercial organizations and citizens registered as individual entrepreneurs.

In Russia, the franchise does not always imply the use of franchising agreement based on its legal basis. Under the franchise agreement may be concluded the following: the contract of franchise, contract delivery, agency, licensing, trade credit, custody, sale, and a number of others.

 

Chapter 2. The study of franchising as an example of the company «Subway»

Although the "McDonald's" first set foot on Russian soil, but a classic in the field of franchise fast food has brought us another U.S. operator of fast food - Subway.

Subway - the world's largest fast-food restaurants, which works on the principle of franchising. The main products are selling sandwiches and salads.

The official name of the company, providing services franchise: Doctor's Associates, Inc. The company was founded in 1965 by Fred De Luca and as of April 1, 2012 has 36,634restaurants in 100 countries (Figure 3).

Figure 3. The development of the company «Subway» in the world

 

The history of fast food chain «Subway» started in 1965, when 17-year-old Fred De Luca opened his first shop selling sandwiches. Co-founder and investor of the project was Peter Buck, a friend of Fred's parents. The first institution of the network was opened in Bridgeport, Connecticut. Booth called the "Super Submarines Pete", as prepared by the sandwich looked like a submarine. A few years later the name was changed to «Subway Sandwiches and Salads." The company was originally used to expand the franchise business. And today, its uniqueness lies in the fact that «Subway» worldwide franchise developed exclusively as a project. In other words, the trademark owner does not have its own restaurant and all the restaurants «Subway» belong to their owners in the franchise.

Every customer in the restaurant «Subway»  hands, "the master of sandwiches," creates his own sandwich. This process begins with the selection of one of the five varieties of freshly baked bread aroma. Visitors are offered a wide choice of toppings - combinations of cold cuts, steak, pork, chicken, tuna, seafood, mushrooms, cheese, etc. Each sandwich includes a set of fresh vegetables and special sauce Subway in any desired combination. To perfect my sandwich can toasting it in the oven TurboChief ®, while cutting the meat warm up, and the bread will become crisp and fragrant!

«Subway» offers its wide range of choices of restaurants to eat quick, tasty, and, most importantly, useful. Subway has positioned itself as a healthy alternative to fast food restaurants networks, which is reflected in the slogan of "Eat fresh!" (English Eat fresh!). The global mission of Subway - to be number 1 in the world in the field of customer service and to develop a chain of restaurants in the world.

Subway system is easily adaptable to different cultural traditions, tastes and is popular not only in Western countries, but also in China, Japan, India, Brazil, Mexico, the Arab countries and Israel. Our sandwiches contain a minimal amount of fat.

In the menu there are always low-calorie sandwiches. A typical Subway restaurant is a small room with a transparent stand, inside which are the ingredients for the sandwiches. Behind the counter are oven baked bread in which the sandwich. In the restaurant is usually not a lot of seats, as in other fast food restaurants (about 10-15), some restaurants some of them (sometimes all) in the form of a narrow table along the wall and bar stools. In restaurants, «Subway»  no kitchen and the whole process of making sandwiches and salads passes directly in front of the customer.

The system «Subway» all restaurants are divided into traditional and nontraditional, depending on location. Traditional street restaurants are all located on the first floor and having a separate entrance. 
To include all the non-traditional restaurants, client flows are generated by other businesses. This institution, located in the food courts of shopping centers, airports, hospitals, schools, bus stops, gas stations or other areas related to activities other than the restaurant business.

The quality of products used to create a sandwich «Subway», and the whole process of forming a sandwich tightly regulated and standardized throughout the world. So you can be sure that, having come to any restaurant «Subway» anywhere in the world, you get exactly what you expect - delicious fresh "sub" with your favorite stuffing.

 

 

2.2 Features franchise company «Subway» in Russia

 

Companies "Subway Russia" took five years to withdraw the Russian market in the fourth place in Europe for existing restaurants (Figure 4). The company plans until the end of 2015. bring this figure up to 1000!

 

Figure 4. Development company  Subway  in Russia

 

As the pace of sales growth, profitability and market performance of individual restaurants Subway in Russia among the top five national markets in the Subway, aRussian restaurant Subway, located in St. Petersburg, on Nevsky Prospekt, is one of the best in terms of sales.

The company «Subway» offers favorable conditions for cooperation and full support to the partners. The franchisor provides the right to sell branded goods «Subway» franchisee - someone who wants to create their own business. License agreementallows the franchisee to use the methods of manufacture of the product. Franchisegranted for 20 years. 
The franchisee buys the right to operate franchises (Fig. 5). The first franchise fee is $12,000.

Figure 5. Payments to franchisees

 

Also, franchisees, under the terms of the contract, shall:

• find a room in which experts estimate will be directly involved Subway;
• pay the first franchise fee;
• chosen to rent or buy premises;
• repair the selected premises in accordance with the allocation plan developed by the restaurant;
• procure the necessary equipment;
• hire staff;
• manage the restaurant in accordance with the standards of SUBWAY ®;
• list the monthly royalties - 8% of the turnover of the restaurant;
• use a standardized brand «Subway», the menu, interior design and control system.

The total cost to open a restaurant is about $ 100,000 - $ 150,000.

 

Duties of the franchisor:

• Give the formula of sandwiches, salads and rolls, as well as instructions on how to manage the restaurant and food handling;
• Assist in identifying and assessing the premises;
• lead the development plan for placement and design of the restaurant; 
  • to train the franchisee and his management staff to conduct initial training of staff;
• provide personal assistance during the opening and after opening the restaurant.

Franchisee shall operate in accordance with the standards of quality, service, cleanliness. However, franchisees are still opportunities for innovation, for new product development is crucial for any business. Consumer tastes change over time, and the company must respond to these changes.

Each franchisee must undergo a full course of a mandatory training program. In St. Petersburg operates a certified training center of Subway, which in Russian trains franchisees and managers for Russia, CIS countries and former socialist countries. English language center is located in the United States, speaking in German are taught in Germany.

The program for franchisees - 2 weeks for managers - 1 week. Full operational support, quality control, monitoring compliance of the system. System-wide marketing program.

For those wishing to purchase a franchise «Subway», the network itself is already solved many of the marketing and organizational issues. Franchise - a whole program, which includes assistance to franchisees in establishing and developing its own restaurant, its advertising, the brand, marketing and manufacturing technology, and personnel training. As a result of this scheme beginning businessman immediately gets refined to perfection, and proven program of action franchise.

The company makes what should be the consumer and profits by maximizing the satisfaction of his needs. Because of this, in the future Subway sees himself the world's best fast-food restaurant chain and intends to surpass its competitors in quality, service level and customer value.

When the company won the Subway consumer confidence, she continued to improve: it became a more attractive design, gradually introduce new items on the menu (business lunches, desserts). Quick Service Restaurants «Subway» become places of family meals that kids love. The locations of restaurants are convenient for customers and service time was reduced to a minimum, thanks to the efforts of the company applied to improve the technology of preparation.

The company «Subway» to expand the distribution system began to issue licenses for the use of their technology. Thus, the system has expanded beyond the United States. «Subway» acts in the interests of society as a whole, supporting charitable and social projects, educational programs, programs for environmental protection, in addition, all visitors can see clearly that all the sandwiches made from fresh ingredients and freshly baked bread.

The organizational structure of the restaurant «Subway»  apply to linear (Fig. 6). For a linear structure characterized by a clear division of labor and the establishment of a brutal system of generalized formal rules and standards to ensure the implementation of staff responsibilities and coordinate the various tasks, hierarchical levels of management, in which each child is subject to and controlled by the parent, a clear division of labor, which leads to a highly skilled in each area. The structure allows the director to efficiently manage the work of the company and stay informed.

Figure 6. The organizational structure of the company «Subway» in Russia

The strengths of the company are:

• Leadership in the domestic and international markets;
• Recognition of institution, its exclusivity;
• High level of customer service through an established staff, nice interior theme;
• SUBWAY offers high-quality, healthy, fresh alternative to traditional fast food. The product is made in the eyes of the customer, at his request.

Weaknesses are:

• Weak monitoring of a network of restaurants;
• Do not always adhered to the standards for the preparation(for example, instead of bacon, sliced meat);
• A small assortment.

The main clients of «Subway» is: middle class, leading an active lifestyle, students and children. So, Subway - it is really successful concept for the development of the franchise form of business, but especially because it is based on healthy eating, unlike many other fast food concepts.

 

 

Conclusion

Franchise history and is firmly entrenched in developed countries, exposure to the objective needs of economic development. Moreover, overseas consider this form of not only useful but also prestigious. So if you seek to learn from all the West's perspective, it is hoped that the franchise will soon appreciate in Russia. After all, the idea of franchising is simple - if there is an interesting, extraordinary and promising concept of doing business, you can earn on her own and pass it to another person to carry out their business in exchange for the use of additional revenue and advertising their business. Any franchise system is based solely on the successful business.

In this paper we studied the history of the origin and type of franchise. On the example of quick-service restaurant «Subway» were the features of franchising and the formation mechanism of the relationship between franchisor and franchisee.

Summing up the results of this work the following conclusions:

1. The Franchise Business is the most preferred for use in power plants, as He suggests various options for cooperation in all areas of business and adaptability to market conditions.
2. Before making a decision about the early development of franchising in the company a potential franchisor must consider all the "pros" and all the "cons" of the future franchise system, both for ourselves and for future franchisees.
3. Doing business in the form of franchise should be both beneficial for both the franchisor and the franchisee's potential and future income potential franchisee's business must be divided proportionately among the subjects of franchising. Thus, to be achieved this level of expenditure and revenue to both businesses were profitable to do business together than separately organized company.
4. Subway - it really is a successful concept for the development of the franchise form of business as well, especially since it is based on healthy eating, unlike many other fast food concepts.

Development of new experiences, the acquisition of new ideas, methods, technologies are always helpful for any kind of activity. That is why Russian business should be legislation to provide legal protection and a guide to action at the conclusion of the internal and international treaties that allow using the franchise system to promote the brand and held technology business in the territory of our country and abroad.

Nevertheless, despite the presence of some inhibitory factors, Franchising in Russia is developing successfully. More and more business circles refers to the use of this efficient form of doing business. However, its significance for the Russian economy is difficult to overestimate: for the franchisor - this is one of the fastest and most effective ways to create a new independent companies united in a single system for franchisees - to develop their own business based on proven business models, and for the state - an effective tool support for small and private entrepreneurship, and, consequently, the development of the entire Russian economy.

 

 

Literature

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2. Gordienko I.S Another favorable Stranger: Franchising / IS Gordienko / Food and Society. - 2006. - № 4
3. The Civil Code of the Russian Federation (Part Two) from 26.01.1996 № 14 FZ(as amended from 30.11.20011), chapter 54.
4. Panin, M.F Active phase of the development of franchising in Russia / M.F Panina / /Dengi. 2006.
5. Raizberg, B.A Modern Dictionary of Economics / B.A Raizberg, L.S Lozovsky, E.B Starodubtseva.- Moscow: INFRA-M, 2007
6. Official website of the company «Subway» http://www.subway.ru/
7. Official website of the company «Nestle» http://www.nestle.ru/
8. http://www.franchisinguniverse.ru/
9. http://www.unitcon.ru/
10. http://www.franchising.co.il/ Franchising Code of Ethics
11. http://www.slovar-ekonomiki.ru/
12. http://www.managment.aaanet.ru