FRANCHISING: What is franchising and how it works?

FRANCHISING: What is franchising and how it works?

The word Franchise comes from the French words free, free and sincere. Franchising can be found even in 1850. It was also as a method of business activities of the bank, where it sells its business methods as well as your name and independent small businesses.

Issac Singer who perfected the sewing machine is to sell more machines set up one of najraninijih examples of franchising. His example, though not profitable and less failure is known as the first documented example frašizinga in America. A little later, one of the most successful franchises is John S. Pemberton and franchising of Coca-Cola. Early examples of franchising the telegraph which led to various driving companies and controlled by Western Union.

The first examples of modern franchising can be found in 1919. in food stores as a businessman to use my name, appearance, and even the food of successful businesses for the annual levy. Franchising has become a popular 1930s. Frašizing was a method of operation when a big company licensed to sell their tried and successful methods of doing business firm or person to pay a voluntary annual dues and meet the given criteria. According to the weekly newspaper “Financial Times” when the turnover of franchising in America was translated as NACIONAL traffic on I was the seventh largest in the world.

Positive aspects frašizinga that the company is willing to buy the license and ensuing crisis often gets the name recognition thanks to the marketing seen as high quality in the minds of consumers. The company that sold the franchise also provides training and assistance in the planning stage. The most negative aspects of franchising as loss of control and high taxes. Often a franchise owner can not use their own style of business, it must be accompanied by accurate as instructed by the company that approved the franchise. Taxes are often presented in terms of overall turnover and not profit, so that if the owner has a large circulation, and yet is able to control the costs he may end up in the red. Today one can find frašizmi hundreds of thousands of companies and the number is increasing every year, of course. The most successful examples franšizma as McDonald’s, Burger King, Hilton and First Bank Interest Ii Los Angeles (USA).


McDonald’s operates in more than 120 countries each day and serves over 54 million customers. Brothers Dick and Mac McDonald opened the first McDonald’s in 1940 and today has the most McDonald’s restaurants in the world in comparison with any other chain restaurants. Dick and Mac in 1948 invented the model of fast food. McDonald’s owns about 70% of existing restaurants and 30% are franšizmi. McDonald’s franchise owners are trained at Hamburger University in Oak Brooks, Illinois (USA). The first McDonald’s in Central Europe opened in 1988. in Belgrade (Serbia). To open a McDonald’s franchise owner has to pay 60% of the cost of the construction and also 45 thousand U.S. dollars as the starting price. To be considered for McDonald’s franchises individual must have a minimum of 200 thousand U.S. dollars and sign a contract for 20 years. Of course, McDonald’s can not be mentioned without mentioning his rival Burger King.


Burger King, which was founded in 1954. in Miami, Florida (USA). He opened his first franchise in 1961. Today it is one of the most successful franchises in the world.

Burger King is known for its slogan “Have it you way” which means enjoy it in their own way. Burge King operates in all 50 U.S. states, Canada and over 60 countries worldwide and is guided by over 90% in the form of independent franchises. Burger King has 11,223 outlets and 10,144 franchising or 90.4%, and only 1,079 of the company’s property. To open a Burger King’s franchise he has to have a minimum of 1.5 million U.S. dollars to pay 50 thousand dollars as initial deposit and then 50 thousand dollars a year. Also, franchise owner has to pay 4.5% tax on profits and 4% for marketing. Also, to open a Burger King’s franchisees must sign a contract for 20 years and provide leadership 15 full-time employees and 35 employees on shift. Facility must be 3,600 square feet, “feet”, approximately 360 square feet, and shall meet the following requirements or be: independent object in the window of the department store, or inside a shopping mall. For those who decide to open a Burger King franchise is achieved by the choice of space, training lasting 300 hours of classroom and 400 hours in the restaurant, and also international corporate team of 928 employees. Burger King plans to expand to all the world that meet the above criteria. According to the statistics, “Businessweek Online,” Burger King for the final period (30 September 2006.) Recorded a net profit of EUR 40 million, ie. a jump of 86% and an increase in the value of shares of 30 U.S. cents. Burger King’s sales reached 546 million this year, a jump of 7% compared to 2005. Based on these data, Burger King’s move to franchising and today paid.
These were examples of the most popular and well-known restaurants that operate on the principle of franchising, and franchising following example refers to the hotel industry or specific Hilton Hotel.


The modern concept of hospitality, which started 85 years ago, thanks to Conrad Hilton which is in 1919. The Hilton opens first hotel and thus began the tradition of excellent service. Hilton’s first franchise was opened in 1967. and is now over 70% Hilton guided in terms of franchising. Hilton currently has 236 hotels, and 169 or 71.6% were fransizmi. Hilton has hotels in 39 U.S. states, Canada, and two foreign countries. Although it seems that Hilton is less widespread this is because the criteria are much stricter than in the case of McDonald’s and Burger King. In order to open the Hilton franchise, own more than 60 million U.S. dollars and the initial deposit is between 33-57 million dollars. Annual dues amount to the basic tax of 5%, an additional tax of 5% tax on marketing than 4% of total turnover. Also the average Hilton franchise must have 150 permanent employees. In order to open the Hilton franchise has to have 135,000 square feet, “feet”, or about 13,500 square feet freestanding building in mind. Franchise agreement is signed for a period of 22 years and may be extended in terms of 10 years. Hilton provides a team of 2,332 employees in the central branch of the training issues and legal issues. The training lasts for four days in Dallas, Texas (USA), three days in Beverly Hills, California (USA) and an additional 3 days in the main branch. Currently Hilton plans to continue to expand in North America and South America focusing on Mexico. Hilton has published turnover of 2.2 billion U.S. dollars. Profit jumped 87%, thanks to the rise in traffic franšiziranih hotel of 671 million U.S. dollars, compared with U.S. $ 31 million 2005th year.


One of the most unusual aspects of frašizma the First Interest Bank in Los Angeles (USA), since the idea of ​​franchising transferisala despite the listed companies such as Hilton, McDonald’s, Coca-Cola, etc.. and banking but of course in a limited form. First Bank Interest In Los Angeles (USA) gave the franchise for 28 banks (with more than 90 banking centers in eight federal units, which has assets of over U.S. $ 4 billion). The banks that were involved in the franchise were able to use the name First Bank Interest and advertising, various business advice from the donor fanšize and training managers. The right of access to ATMs also received from First Bank Interest-e and various other miscellaneous benefits. Of course, all these banks have maintained their existing ownership structure. Why is it important to mention this bank because, as initially stated that the franchise was created as a method of business activities of the bank, where it sells its business methods as well as your name and independent small businesses and companies.

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