Introduction

Derived from a French word Fransis meaning

privileged or freedom
A franchise is a form of business ownership
created by a contract whereby a company
grants a buyer the rights to engage in selling or
distributing its products or services under a
prescribed business format in exchange for
royalties or share of profits.

Franchise System
Franchise Agreement
Franchisor
Franchisee

Franchisee
Pays Up-Front Costs
Makes Monthly Payment to Franchisor
Runs Business by Franchisors Rules/Procedures
Buys Materials from Franchisor/ Approved
Supplier

Advantages of Franchising to
the franchisee
Easy to get started
Reduces chances of failure
Product Acceptance (Recognition)
Mgmt. Expertise
Buying Power
Market Knowledge
Advantage of R & D facility
Financial Advice and help

Franchisor Provides
Facility Layout
Control Stock &
Inventory
Buying Power
Advertising/Sales
Promotion- Local &
National

Disadvantages of Franchising
No scope for creativity
Restrictions on franchisee in terms of product
line and geographical operations
Do not have the right to sell their business to
the highest bidder or leave it to the family
member
Goodwill remains the property of the franchisor
Failure of franchisor
Threat of buyback upon termination of the
contract

Advantages to Franchisor
Advantages
Quick Expansion &
Little Capital
Large Operation Yet
Few HQ Employees
Economies of Scale
Large Advertising
Budget

Disadvantages
Difficult to find quality franchisees
Single franchisee failure reflects on entire
system
Expansion creates loss of control

Franchise Capital Requirements

$Franchise/Royalty Fee
$Construction Costs
$Equipment Purchase

Franchise Types
1. Product Franchising
2. Manufacturing Franchising
3. Business Format Franchising

Contd
4. Conversion Franchising
5. Multitasking Franchising
6. Master Franchising

Legal Framework for Franchising in

India
Indian Contract Act 1872
Intellectual Property Act and Copyright Act, 1957
Competition Laws
Consumer Protection Act 1986

Evaluation of Franchise
Arrangement
Evaluate your self
Research Market
Evaluate all franchising opportunities
Investigate the business partner
Talk to existing franchisees

6. Starting an ECommerce Venture

Electronic commerce or e-commerce refers to
a wide range of online business activities for
products and services.
It also pertains to any form of business
transaction in which the parties interact
electronically
rather
than
by
physical
exchanges or direct physical contact.
E-commerce is usually associated with buying
and selling over the Internet, or conducting
any transaction involving the transfer of
ownership or rights to use goods or services
through a computer-mediated network.

Difference between E-Commerce and EBusiness

Ecommerce is part of e-business

E-business is a structure that includes not

only those transactions that center on
buying and selling goods and services to
generate
revenue,
but
also
those
transactions
that
support
revenue
generation.
These activities include generating demand
for goods and services, offering sales
support
and
customer
service,
or
facilitating
communications
between
business partners

Benefits
Overcome Geographical Limitations
Gain New Customers With Search Engine Visibility
Lower Costs
Advertising and Marketing
Personnel
Real Estate

Locate the Product Quicker

Benefits
Eliminate Travel Time and Cost
Provide Comparison Shopping
Enable Deals, Bargains, Coupons, and Group Buying
Provide Abundant Information
Create Targeted Communication
Remain Open All the Time
Create Markets for Niche Products

Popular Products/Services
Airline and travel tickets
Banking services,
Books,
Clothing,
Computer hardware, software, and other electronics,
Flowers and gifts

Limitations
Technological and inherent limitations
Less penetration of PCs, credit cards and internet
Security concerns
Digital Illiteracy
Not suitable for perishable commodities

Different Types of E-Commerce

Business-to-business (B2B)
B2B e-commerce is simply defined as e-commerce
between companies. This is the type of e-commerce
that deals with relationships between and among
businesses. About 80% of e-commerce is of this
type.
Business to- consumer (B2C)
Business-to-consumer e-commerce, or commerce
between companies and consumers, involves
customers
gathering
information;
purchasing
physical goods (i.e., tangibles such as books or
consumer products) or information goods (or goods
of electronic material or digitized content, such as
software, or e-books); and, for information goods,
receiving products over an electronic network.
It is the second largest and the earliest form of ecommerce. Its origins can be traced to online

 Business-to-government (B2G)
Business-to-government e-commerce or B2G is generally
defined as commerce between companies and the public
sector. It refers to the use of the Internet for public
procurement, licensing procedures, and other governmentrelated operations.
Consumer-to-consumer (C2C)
C2C is simply commerce between private individuals or
consumers.
This type of e-commerce is characterized by the growth of
electronic marketplaces and online auctions, particularly in
vertical industries where firms/businesses can bid for what
they want from among multiple suppliers.
M-commerce
Mobile commerce is the buying and selling of goods and
services through wireless technology-i.e., handheld devices
such as cellular telephones and personal digital assistants
(PDAs). Japan is seen as a global leader in m-commerce.
Eg. Mobile Banking

Reasons for Fueling E-Commerce

Economic Forces
Reduction in communications costs
Low-cost technological infrastructure
Speedier and more economic electronic transactions
with suppliers
Lower global information sharing and advertising costs

 Market Forces
Corporations are encouraged to use ecommerce in marketing and promotion to
capture international markets, both big and
small.
The Internet is likewise used as a medium for
enhanced customer service and support.
It is a lot easier for companies to provide their
target consumers with more detailed product
and service information using the Internet.

 Technology forces.
The development of ICT is a key factor in the growth of
ecommerce.
This has made communication more efficient, faster,
easier, and more economical

Components of E-commerce
Transaction
The Seller should have the following
components:
A corporate Web site with e-commerce
capabilities (e.g., a secure transaction
server);
A corporate intranet so that orders are
processed in an efficient manner;
IT-literate employees to manage the
information flows and maintain the ecommerce system.

Transaction partners include:

Banking institutions that offer transaction clearing services
(e.g., processing credit card payments and electronic fund
transfers);
National and international freight companies to enable the
movement of physical goods within, around and out of the
country.
For business-to-consumer transactions, the system must
offer a means for cost-efficient transport of small packages
(such that purchasing books over the Internet, for example,
is not prohibitively more expensive than buying from a local
store);
Authentication authority that serves as a trusted third party
to ensure the integrity and security of transactions.

Consumers
(in
a
business-to-consumer
transaction) who:
Form a critical mass of the population with access
to the Internet and disposable income enabling
widespread use of credit cards; and
Possess a mindset for purchasing goods over the
Internet rather than by physically inspecting items.
Firms/Businesses (in a business-to-business
transaction) that together form a
critical mass of companies (especially within
supply chains) with Internet access and the
capability to place and take orders over the
Internet.

Government, to establish:
A
legal
framework
governing
e-commerce
transactions
(including
electronic
documents,
signatures, and the like); and
Legal institutions that would enforce the legal
framework (i.e., laws and regulations) and protect
consumers and businesses from fraud, among others.
And finally, the Internet, the successful use of which
depends on the following:
A robust and reliable Internet infrastructure; and
A pricing structure that doesnt penalize consumers
for spending time on and buying goods over the
Internet (e.g., a flat monthly charge for both ISP
access and local phone calls).

E-Commerce Business Models

Merchant model:
This model basically transfers the old retail
model to the e-commerce world by using
the Internet
Selling goods and services over the Web.
Amazon.com is a good example of this type
Brokerage model:
The e-business brings the sellers and
buyers together on the Web and collects a
commission on the transactions by using
this model.

Advertising model:
This model is an extension of traditional
advertising media, such as television and
radio.
Search engines and directories such as
Google and Yahoo provide contents (similar
to radio and TV) and allow the users to
access this content for free.
By creating significant traffic, these ebusinesses are able to charge advertisers
for putting banner ads or leasing spots on
their sites.

Info-mediary model:
E-businesses that use this model collect
information on consumers and businesses
and then sell this information to interested
parties for marketing purposes.
Subscription model:
An e-business might sell digital products to
its customers, by using this model.
The Wall Street Journal and Consumer
Reports are two examples.