Commodity franchising means exclusively the sale of goods. This is the relationship that takes place between the franchise parties that are involved in a trade. In this case, special rights are transferred by the franchisor, and acquired by the frachisers. These rights are limited to a specific territory. They are put on the sale of those products that are produced within the brand of the franchisor.
Types of franchising
Franchising is distinguished in two ways. The first type involves the sale of products from the first manufacturer. Moreover, this product or product has a trademark. Basically, the franchisee specializes exclusively in retail. This is due to the fact that this type of franchising involves direct contact between the seller and the buyer.
The delivery of goods can be made by the franchisor in two ways: directly through the franchisee and through a third party. In this case, the main task of the third party is the distribution of products. Such a person can be:
- Agent.
- Distributor.
- Similar representatives of commerce.
Thanks to such a relationship scheme, you can increase the sale of goods. There is also an opportunity to sell products in those areas that are remote from the main ones. In addition, a material cost management system is provided, which occur at lower costs.
The schemes of interaction between third parties and franchisors may be different. However, the key factor in this relationship is the following:
- Product.
- Brand.
- Uniformity.
- Brand identity.
Thanks to this, the manufacturer becomes recognizable. Much attention is paid to the wide assortment that is offered to the buyer. In such situations, the following persons act as the franchisor: a manufacturer of petroleum products, alcoholic beverages, toys, and so on.
In the case when they talk about the second option of franchising, they mean the distribution of products by those companies that are not directly involved in the production process. However, they have long-term business relationships with a large number of suppliers. In addition, they have the ability to manage the assortment and form it.
Features of franchising
When there is such a relationship, then the purchase of products by the franchisor comes from different suppliers. And the sale of products is made by franchisers. In this case, the retail sale of goods takes place.
One of the key points is the franchiser brand. The uniformity of the network and brand identity also play a role.
