Franchise

What is franchise?

Franchise: amount of experience and technologies that are provided to cooperation partner for a certain fee. During the lasts decades franchise has experienced phenomenal distribution and popularity in the world as it is more beneficial than sale of shops.
In the time when new foreign players are preparing to penetrate in retail sale market in Latvia, local shop owners have only few business development possibilities – operation by using franchise and retain independence or sale of company to foreign shop chain or specialisation. There is no need to back off from own ideals and independence in business if shop operates on the principles of modern economics – franchise. During the last 30 years franchise has experienced phenomenal distribution and popularity in the world as it is more beneficial alternative that sale of shop.
Experts in economics have admitted franchise as mutually beneficial or, in other words, win-win business offer, which provides advantages both to franchisee and franchisor and also to the customer. Franchisor gives permission to use its recognizable brand, provides consultations regarding placement of goods and ensures regular delivery of goods. In addition single marketing activities (discounts, gift campaigns, special offers and other sales promotion activities) significantly increases customer flow, turnover and ensures competitiveness.
The only franchisor in groceries retail sale is Pārtikas tirdzniecības apvienība which unites progressive retailers who wants to develop faster and to earn more. Therefore, already today many shop owners in Latvia express willingness to obtain ELVI franchise. Already 68 ELVI shops are operating under franchise and until the end of the year 3 more shops will join ELVI.

Franchise system in the world

At the moment the number of companies operating under franchise exceeds 40% from all trade amount in USA's market; in total, 7.2 millions employees are involved. The leader in Europe is Germany – 530 franchisors have issued license to 22 thousands franchisees.
There are more than 60 business types in the world, which are developing of franchise principles. The most widely spread franchise is in the fast-food field (a well-known example – McDonald's) and sale of groceries and drinks (Coca-Cola, Pepsi).