Total Franchise Agreement

In the 1850s, Singer Company implemented a franchise plan for the distribution of its sewing machines. However, the company failed because the company did not make much money, although the machines sold well. Traders, who held exclusive rights to their territories, recorded the bulk of the profits as a result of the deep discounts. Some failed to push Singer products, allowing competitors to sell the company. Under the existing contract, Singer was unable to withdraw the franchisees` rights or send its own representatives. Then the company began to buy back the rights sold. The experiment proved to be a failure. It may have been one of the first times a franchisor failed, but it was far from the last. (Even Colonel Sanders failed to support his franchising efforts in Kentucky Fried Chicken.) However, the Singer project did not end franchising. Franchising is based on a marketing concept that can be adopted by an organization as a business expansion strategy. When implemented, a franchisor licensed a franchisee to sell its know-how, procedures, intellectual property, use of its business model, brand and rights, branded products and services. In return, the franchisee pays certain fees and agrees to meet certain obligations that are typically defined in a franchise agreement. The most successful examples are probably Kringwinkel`s second-hand stores with 5,000 employees in Flanders, franchise of KOMOSIE,[61] CAP Markets, an ever-growing chain of 100 convenience supermarkets in Germany.

[62] and the Tritone Hotel in Trieste that inspired the social franchise Le Mat, now active in Italy and Sweden. [63] Often, training time – the costs of which are largely covered by upfront costs – is too short in cases where complex devices need to be operated, and the franchisee must learn from the user manuals itself. Training time should be appropriate, but in cheap franchises, it can be considered expensive. Many franchisors have set up corporate universities to train employees online. This is in addition to the provision of literature, sales documents and e-mail access. Although many entrepreneurs were associated with cooperatives of one kind or another, until the early 20th century, there was little growth in franchising, and the form of the franchise was not as it is today.