franchising in serbia business concept for economic development and development of entrepreneurship...

Franchising in Serbia Business concept for economic development and development of entrepreneurship in Serbia Presenters: Goran Seujski Miodrag Kui (RE/MAX) FTN November 13th, 2007 Universitiy of Novi Sad UNESCO Chair of Entrepreneurial Studies

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - Franchising in Serbia Franchising terms and types Franchising in Serbia business concept for economic development and development of entrepreneurship in Serbia RE/MAX case study

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - Part 1 FRANCHISING (terms and types)

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising -Franchising 4 issues: Economic issue Legal issue Franchisor issue Franchisee issue

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Franchising Economic Issue -The aim of presentation how franchising could help economic development of Serbia -Positive social-economic impacts of franchising -Franchising type of vertical cooperation -Business concept on basis of cooperation between producers, wholesale and retail

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Franchising Legal Issue -Franchise agreement the most important document to regulate relationship in franchising network -First franchise agreements up to 3 (three) pages -Todays franchise agreements more then 50 (fifty) pages -Franchise agreement complex agreement (licence, know-how) -In USA 70s The Code of Conduct -UFOC (Uniform franchise offering circular) general terms

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Franchising Franchisor and Franchisee Issue -Strategic decision -Franchisor: decision to form franchise network, procedures, training, control, copyrights... -Franchisee: decision to buy a franchise, franchise fee/royalties, level of franchisor control... -Advantages and disadvantages

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Frranchising Advantages and Disadvantages for Franchisor Advantages: minimum capital potentially high growth rate highly motivated and dedicated local management lower administrative costs continuous protection of trade mark faster establishemt of national brand. Destroys competition Disadvantages: risk of independence tendency at franchisee standard control no control over franchisees empleyees

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Advantages and Disadvantages for Franchisee Advantages: lack of knowledge compensated with training legaly independent company lower risk of failure (comparing to strarting own business) less starting capital use of brand name standard products and quality ongoing professional help group purchasing discounts Disadvantages: not completely independent constant compliance with the agreement and standards ongoing financial obligations (royalites, advertising fees)

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Common Terms Taken from An Introduction to Franchising

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Common Terms -FRANCHISE from French word franchir which means privilege or rights. -Definition licence that gives franchisee rights to sell products/services of franchisor using franchisors trade/service mark and its business experience. For this rights franchisee is obliged to pay franchise fee/royalites and the franchisor has right to control the use of given rights.

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Common Terms -FRANCHISING contractural form of vertical marketing system in distribution -Method of market expansion utilized by a successful business entity wanting to expand its distribution of services or products through retail entities owned by independent operators using the trademarks or service marks, marketing techniques, and controls of the expanding business entity in return for the payment of fees and royalties from the retail outlet. (Erwin J. Keup 2004 Franchise Bible, Entrepreneur Press)

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Common Terms -Franchise agreement legal contract which tells franchisor to perform periodic deliveries and service activities, and to transfer its know-how to franchisee. The franchisee is obliged to pay fees and to perform according to contractual stipulations.

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Common Terms -FRANCHISOR legally independent entity which developed brand and unique concept due to business experience in an industry. This concept could be transfered to another legally independent entity. -FRANCHISEE legally independent entity that gets the right from the franchisor to do business under franchisors trademark, for which franchisee pays fee.

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Common Terms -FRANCHISING SYSTEM or FRANCHISING NETWORK relationship between franchisor and its franchisees.

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Types of Franchising 1. Product distribuion franchising 2. Business format franchising

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Product Distribution Franchises -Isaac Singer & Singer Sewing Machine Company second half of XIX century -Dealership network -Local businessman - exclusive rights to sell sewing machine -First franchise agreement -Coca-Cola, General Motors, Ford Motors...

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Product Distribution Franchises -Franchising of first generation -Franchisee sells product using producers trade or service mark -Soft drink distributors, automobile dealers and gas stations -1/3* of US retail through franchise units *1/2 of US retail - updated

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Business Format Franchises -Most common type of franchise -Franchisee sells products/services of franchisor using its trade/service mark and business concept -Copy capable concept -Service sector fast food restaurants, business services, maintenance, hotels, tourism, real estate...

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 1. Franchising Single-unit and Multi-unit Franchise -Two other types of franchises -International franchising -Single-unit franchise the franchisor grants a franchisee the rights to open and operate one franchise unit -Multi-unit franchise a) area development franchising b) master franchising

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - Part 2 FRANCHISING IN SERBIA (business concept for economic development and development of entrepreneurship)

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 2. Franchising in Serbia National Franchise Networks -Between 15-20 domestic franchise networks -No evidence about exact number of franchise units -Product distribution franchise the most common type of franchise in Serbia

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 2. Franchising in Serbia National Franchise Networks

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 2. Franchising in Serbia International Franchise Networks

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 2. Franchising in Serbia First Franchising Conference -The First Franchise Conference April 11th 2007 -Milan Parivodi, Slobodan Milosavljevi, Michael Polt, William LeSante (vice president of Global Marketing Committee IFA) -Subject: franchising basics, how to buy a franchise, how could franchise help Serbian economy -Summary: franchising is not developed in Serbia -AMCHAM & IFA offered help

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 2. Franchising in Serbia First Franchising Conference -Report Serbia: Franchising Market -Serbia: One of the largest markets in the region after Romania Increase in purchasing power Western products and services highly valued Local laws in compliance with EU laws No limitations for US franchises

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 2. Franchising in Serbia Business Concept for Economic Development of Serbia -Franchising is not a guarantee for success -Serbia has advantages in agriculture and service sector -How franchising could help: 1) Cut unemployment rate 2) Small retail shops under big supermarket chain umbrella 3) New national franchises, spreading both nationaly and regionaly

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 2. Franchising in Serbia Franchising and Unemployment -High rate of unemployment -Franchising advantages avoiding begginers mistakes, no previous experience needed -Higher success rate of franchisees compare to starting own business -Serbia Development Fund financing start-ups

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 2. Franchising in Serbia Small Retail Shops and Supermarket Chains -Owners of small retail shop compete with strong competition (Rodi, Mercator, Delta, Metro...) -Entering into franchise sistem (npr. DIS, DELTA MAXI/PEKABETA) small retail shops have advantages group purchases, discounts, common marketing, no entrance fees -If you can not win, join.

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 2. Franchising in Serbia New Franchise Networks -Everyone could name at least 1 national company that could be franchisor -Advantages: market expansion in Serbia and in region, brand, employment

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 2. Franchising in Serbia What are The Next Steps? -Franchising in Serbia is obviously existing -Franchise is not legaly regulated (it is only once mentioned in Antitrust Law) -Franchising is not limited by any law -Suggestion: promoting franchising (state agencies, banks, individual initiatives), establishing one national association, Code of Ethics

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 2. Franchising in Serbia Something is Rolling... -2007 is turning point for franchising promotion in Serbia: First Franchising Conference Rise of internet sites promoting franchising in Serbia National Chamber of Commers published brochures and preparing seminars in 2008

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - PART 3 RE/MAX Mr. Miodrag Kui, Regional Manager for Serbia and Montenegro

UNESCO Chair of Entepreneurial Studies - Franchising in Serbia - 3. RE/MAX Case Study -RE/MAX leader in real estate market in USA, Canada and other competitive markets -Established in 1973 -121000 agents in 67 countries -Sales over 1 million real estates for a year -The best of the best -The fastest growing franchises 11th place; The most affordable franchises 4th place; The best world franchises 9th place -In the book 50 Companies That Changed the world by Howard Rothman

franchising in serbia business concept for economic development and development of entrepreneurship...

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