In: Operations Management
a) Franchising is a marketing concept that helps the company to grow and expand its operations. Many enterprises use different methods of expanding their processes and operations in the entire world. It is a kind of license that a company acquires to have access to the business's property and get insights into the procedures of the company and its production.
b) Many companies adopt this approach to earn from the leading company by establishing a franchise in the other part of the country or any other foreign country. It will also help the franchisee gain from the company's already have notions and recipes. The franchises can sell the product under the company's name. Many companies use the method of franchising to increase their reach in the market. For example, McDonald's uses the approach of franchising in different parts of the world. Many local companies sell the products in the name of the company with the same recipes. It also helps the company to gain more because of the goodwill of the company. Companies like Starbucks also take franchising to spread their operations in different parts of the world. The companies that have an excellent reputation in the market tend to get into the process of franchising. Companies like PizzaHut, Domino's, or any other food chain suppliers are prone to use franchising as their marketing strategy. Hence, it is an effective way to increase the gains of a particular company and the franchisee. Moreover, if a company takes up a multinational company's franchise, it has to comply with its rules and regulations to maintain the contract and its terms. The company trusts the franchisee with its recipes and goodwill, and hence, it becomes the responsibility to abide by the contract's rules and procedures. The company can also end the franchising contract if it finds that it is not abiding by the set terms and conditions. The contract is evidently at the discretion of the leading company, not in the franchisee's hands. Moreover, both companies should state the contract's specific terms to avoid any violation in the future.