Business format franchising and

Product franchising
Product franchisor is a manufacturer who gives
franchisee to contractual outlets for selling its branded
goods
Franchisee conducts business as an independent
distributor
Business format franchisor is a retailer who licenses the
right to reproduce the franchisors business formula
and systems in another location
Franchisor receives Royalty fees as a percent of gross
sales as well as rent fees if the outlet is franchisor
developed

Product Line
Till early 1980s, the product line consist of
Doughnuts and coffee
However, by late 1980s, specialty baked foods,
soups, muffins, cookies and sandwiches were
introduced

Conflict Management
In case the property for the new outlet was
developed by company and an existing franchisee
think that it is unfavorable for it, it has the option
to appeal before grievance committee. However,
the company retained the right to open the shop
against recommendation of grievance committee
In case the property is entirely franchisee
developed, the company scrutinize the proposal
carefully and make a decision whether to permit
or not

Shift from Company developed to

franchisee developed model
Due to drop in sales growth, the sales to
capital ratio dropped
Projected ROI declined significantly
No. of objections from franchisees over the
companys planned development was
increasing
Management wanted to free up capital for
more attractive alternatives

What customers liked

Freshness and consistency of products
Ease and availability of the purchase

Different ways of customer segmentation

Based on consumption location
Shop
Car
Work
Home
Time of purchase
Degree of Usage comparision

Fear and Greed

Fear factor
Sought to expand their own business and preclude
development in their own area by competing
franchises

Greed factor
To jump into other franchise territories, where
the business is relatively successful so as to cash in
benifits