Franchises


A franchise is a contract arrangement by which the owner of a trade name, trademark, copyright, or process grants permission to others to use this property in selling goods or services under specified conditions.

The purchaser of a franchise (franchisee) obtains the advantage of offering a well-known or unusual product that may already have wide appeal. The franchisee  also receives the benefit of mass buying and advertising. Typically, the buyer of a franchise may pay a flat fee for the franchise as well as an additional percentage based on sales. The franchisee may also be required to pay a fractional share of the franchisor’s promotional costs and to purchase certain supplies from the franchisor.

Contract and sales laws pertaining to franchises are comparatively new. If the franchise involves the resale of goods or food, both the franchisor and franchisee will usually be liable under a breach of warranty if the food or other merchandize is not wholesome or proper from the consumer’s standpoint. However, tort liability to a third person is usually the responsibility of the franchisee alone. In a case where the franchisee’s truck struck  and negligently injured a pedestrian , the franchisor would normally have no responsibility.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Pulling in High Quality


Organizations pay a lot of attention to product quality. Thousands of companies advertise that they are “ISO 9000 registered,” and man have objectives of making ‘products of the highest quality.’ They emphasize quality for four reasons:

a.    Processes can now make products with guaranteed high quality;

b.    High quality gives a competitive advantage;

c.    Consumers have got used to high quality products, and won’t accept anything less;

d.    High quality reduces costs.

 

If you make poor quality products, your customers will simply move to a competitor. Although high quality won’t guarantee the success of your products, low quality will certainly guarantee their failure. So survival is one of the benefits of high quality, and others include:

a.    Competitive advantage coming from an enhanced reputation;

b.    Larger market share with less effort in marketing;

c.    Reduced liability for defects;

d.    Less waste and higher productivity;

e.    Lower costs and improved profitability;

f.     Enhanced motivation and morale of employees;

g.    Removal of hassle and irritants for managers.

 

Most of these are fairly obvious – if you increase the quality of your products, you expect people to switch from competitors. But the idea that higher quality can reduce costs is particularly interesting. This goes against the traditional view that higher quality automatically means higher cost. Gucci are well known for this combination, and say, ‘Quality is remembered long after the price is forgotten’

 

When you take a broader look at the costs, you can see that some of them really go down with higher quality. If you buy a washing machine with a faulty part, you complain and the manufacturer repairs the machine under its guarantee. The manufacturer could have saved money by finding that fault before the machine left the factory, and it could have saved even more by making a machine that did not have a fault in the first place.

 

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight