Distribution and franchising

Résumé du document

Distribution is the process of moving a product from its manufacturing source to its customers.

Producer and wholesaler have a strong link and some obligations toward the other.

The choice of the distribution channel is essential to the success or the failure of a brand.

There are several classifications: direct (no intermerdiaries) vs indirect. Indirect one is essentially composed of exclusive, selective, intensive distribution and franchising.

Concept: When a supplier sells through as many retailers as possible, it maximizes the supplier's sales and allows him to obtain large market shares. The high cost is compensated by the huge volumes sold. It enables retailers to offer many brands and product versions.
For convenience products: washing powder, beverages…

Extraits

[...] Indirect one is essentially composed of exclusive, selective, intensive distribution and franchising. < number > Untitled-2.JPG Principles No intermediary between the manufacturer and the customer. Ex: factory outlet, shops, markets, e-commerce A particular example: the e-commerce application of both the legislation on distance sales and on the Internet Direct distribution < number > Untitled-2.JPG Legislation for e-commerce Direct distribution: the case of the e-commerce < number > Untitled-2.JPG < number > Legislation for e-commerce Direct distribution: the case of the e-commerce < number > Ability for the customer to check his order before paying Sending of an e-mail by the firm, to acknowledge the receipt of the order Indication of the limit delivering date Conditions for the sale contract to be lawful Seven days to retract and to ask for reimbursment The firm has 30 days to reimburse him. [...]

[...] Wholesaler : benefit from the product notoriety and from the exclusivity. Selective distribution < number > Untitled-2.JPG How does it work ? The selection is implemented through : Supplier general terms and conditions Supply terms (price, payment, delivery . ) Supply conditions (selling point facilities, location, seller's skills . ) Selective distribution < number > Untitled-2.JPG < number > Legislation Country free competition rules. European Commission guidelines “The seller number limitation depends on selection criteria linked first of all with the product nature” Criteria : objective nature and not implemented as a way to discriminate. [...]

[...] Contract with fixed conditions. Refuse to supply  you have to give a proof that the conditions are not respected. Otherwise can be seen as an uncompetitive practice Selective distribution < number > Julie Soubeyrat, Marie Wendling, Norman Bahemia, Viviane Thomas Untitled-2.JPG < number > Legislation The manufacturer can get compensation for the damages if the wholesaler infringes (directly or indirectly) the prohibition to sell out of the selected network. Selective distribution < number > Untitled-2.JPG Definition Marketing strategy that gives intermediaries an exclusive right to sell products in specified geographic areas. [...]

[...] Ex: soft drink distributors, car dealers and gas stations Business format Most common form of franchise . The franchisee uses/replicates the complete method to conduct the business. Ex: fast food, retail, restaurants, business services and lodging Franchising < number > Untitled-2.JPG Advantages and Disadvantages of being a franchisee Advantages Disadvantages Partial Independence Use of a recognized brand name and trademark Exclusive rights in your territory Pre-Opening Support & Ongoing Support from the franchisor Relationship with suppliers already established Restriction on how you run the business Ongoing royalties (cost of buying the franchise and management service fees) Other franchisees could give to the brand a bad reputation Term is limited Franchising < number > The franchise agreement Franchise attorney required to assist the franchise. [...]

[...] It has to be written on the website. Rights of the customer The Council and the Commission encourage firms and customers to solve by mutual consent their litigation In case of law suit asked by the customer, it can happen or in the country of the firm, or of the customer. Litigation Untitled-2.JPG < number > Concept When a supplier sells through as many retailers as possible. It maximizes the supplier's sales and makes him get large market shares. The high cost is compensated by the huge volumes sold. [...]