Chain activity is about making businesses form store groups in a certain form, carrying out division of labor, responsible for different departments to achieve economic scale.
According to chain management rights and ownership concentration, it can be divided into three modes: direct chain, franchise chain, and free chain.
1, Chain Directly
The direct sequence (Regular Chain, or RC for short) is also known as the regular string, which refers to the head office that directly manages the chain stores. Typically, a strong company will expand its scale through mergers, acquisitions or become sole proprietors, etc. to expand its scale and achieve economic scale.
Harvard Business Management Consulting defines the string directly in the “New Business Management Dictionary”: “A retailer consists of two or more retailers with ownership and centralized management, usually a retailer. large scale.
Typical representative companies of direct chains are Sears, JCPenny, Kmart, etc. Usually, the direct sequence is the way that chain stores are often used in the early stages of development. As the development of the chain of stores goes in the right direction and the scale is gradually increasing, the chain stores will start looking for franchise stores.
Advantages of Direct Series
- The headquarters of the chain can manage human resources, assets, and financial resources in a unified way, each branch of the chain performs a unified management regime to achieve economic scale.
- Capital held by one person and can cooperate with other industries to recognize appreciation for capital.
- It can fully promote the common advantages of information, logistics and modern management while allowing all chain stores to maintain coherence in talent development, new technology, and product development. new products.
- The store directly relies on the chain of stores in major cities across the country to establish branches, which can narrow the gap with consumers, understand their needs promptly and constantly improve products to attracts more consumers. In the context of a market that tends to produce large-scale, the direct chain has become a bridge for mass production and mass consumption. At the same time, the direct chain can also increase the profitability of low-profit products.
- Centralized functionality can improve the market competitiveness of chain stores. For example, the headquarters is responsible for purchasing goods, negotiating supply channels and obtaining discounts. Each chain store is responsible for marketing and sales, thus reducing management costs, selling goods at low prices and attracting a large number of consumers.
2, Franchise Chain
Franchise chains are also known as franchise chains or franchise chains (FC Chain Franchise for short), which refers to establishing a cooperative relationship between franchisors and franchisees.
Trademarks, trade names, products, services, patents and know-how, and business models, as well as franchisors, are subject to corresponding obligations. Compared to the direct sequence, ownership of the franchise chain is distributed and management rights are centralized.
Specifically, The Advantages of Franchise Chains Are Expressed in The Following Four Aspects:
Benefits For Franchise Chain Headquarters
- It can save capital and manpower of company headquarters, quickly expand the scale of the company with the lowest cost and the least manpower, expand the scope of communication and promote the development of the company. in the shortest time.
- Cooperating with partners to manage the company, the chain of stores bears less risk.
- Links and royalties provide a strong financial guarantee for the development of franchise chains.
- The stable circulation of goods is conducive to promoting chain store expansion.
- The company’s headquarters can know the franchise’s status in real-time and adjust the number of franchise stores in time according to its size and strength.
- Managing franchise shops unified franchise store-style, staff clothes and other styles remain the same so that the chain stores in the market have a higher level of brand awareness.
Benefits of Franchise Activities For Franchisors
- Thresholds for low franchise chains, those with no relevant business experience can also operate this kind of chain.
- Less risk
- Low operating costs
- There are many channels to increase awareness, can quickly spread
- Advertising strategies can be implemented at the same time in many franchise stores, leading to greater strength.
- It can sell a large number of cheap, good quality goods.
- Can adapt to the ever-changing market environment.
- It can focus on developing marketing strategies.
- It can attract a large number of outstanding talents.
Benefits of Franchise Chains For Consumers
- Consumers can enjoy high-quality services in any franchise store and have a satisfactory consumer experience.
- The excellent business philosophy and management methods of the headquarters have been passed down, the professional skills of franchise stores have improved.
- Franchise stores are at lower risk and can provide consumers with more affordable products.
Benefits of Franchising Activities For The National Economy
- Increase job opportunities
- Promoting stable economic development
- Improve the market competitiveness of small and medium enterprises
- Ordinary people have access to the value of life
3, Free Chain
The free chain is also known as the voluntary chain (Voluntary Chain for short), meaning that the ownership of the common activities of the individual remains unchanged. In general, free chains include several different capital traders to form a headquarters, using the same purchase channel and delivery method.
Unlike the direct chain and franchise chains, the franchise’s ownership and finance of franchise chains are separated. Franchise stores do not engage in economic activities as a branch of the headquarters but use the same order, delivery, advertising and development strategies.
Also, each store is responsible for its own profits and losses and can freely adjust its internal personnel relationship, which may be different from the headquarters for the type of business and method. business and business strategy. Each store only needs to pay a certain franchise amount for its annual headquarters.
Advantage of Free Sequence
- Each franchise must be marketed according to the business model of the headquarters. Although autonomy is limited, it is more beneficial for the role of the team and the benefits of scale.
- Businesses in the form of chain stores in different places established branches, this can bridge the gap with consumers, timely understand their needs, companies can continuously adjust the battle marketing strategy, improving products and services for consumers to have a good shopping experience.
- The office has agreed on the management model and marketing strategy, helping to reduce the workload for franchise stores, thus saving manpower, assets and financial costs, facilitating stores franchise focus on selling products, thereby increasing sales.
- Enterprises can get timely and accurate consumer information, harness the potential needs of consumers and adjust their marketing strategies to form user engagement and loyalty.