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Answer» (i) Mail order shops : - A method of trading where in buying and selling of goods takes place through mails without coming in direct contact is called mail order trading. The owners of such businesses are called owners of mail order shops or direct mail shops.
- In mail order form of retail selling the sellers gather database of name, address and e-mails of prospective customers from market. Then they send their product catalogue to these people either through e-mail or post. After studying the catalogue if people like the product they contact seller and place the order on telephone or through website.
- The sellers deliver the items to the buyers at their address and receives money either in cash i.e. COD or through VPP, etc.
- The biggest advantage of mail shops is that goods can be sold and sent to any person residing at any part of the country.
- Mail shops generally sell limited products that are light weight, durable and high priced.
- Thus, mail order shops do the entire business from advertising to delivery and sending payment receipts through mail.
(ii) Franchise : - A well-known and established brand when gives a special right or privilege to someone to use his brand name or trade mark and process for manufacturing or selling the products or service is called franchise.
- A legal contract is signed between the company i.e. franchisor and the person to whom franchise is given i.e. the franchisee.
- For example, McDonalds, Domino’s pizza, Aptech computers, etc. all run on – franchise model.
Business model:
The brand or trademark owner (example: McDonalds) is called the parent company. -» The parent company signs a legal contract with the person who wishes to take franchise of the company. The company collects franchise charges and royalty i.e. commission on sales from the seller i.e. franchise. Against this the company allows the seller to use company’s brand name, trademark and products and processes. Business support that the franchisee receives:
Based on the product type, the parent company supplies raw materials, semi-finished material or even finished material to the franchisee. For example, a pizza franchisor may supply pizza base, gravy, cut-vegetables, etc. to the franchise. The company also provides training on how to assemble the product, how to serve it, how to deal with customers, etc. - In case of educational franchises like Aptech, the company provides training to staff on teaching methods, provides reading material, etc.
- The company maintains an identical method of business, identical exterior and interior, identical products, menu, teaching courses, etc. across all franchises. This means that irrespective of the franchise a customer visits he gets same products and services.
- The franchisee gets the advantage of the strong brand of the parent company and its processes and support and hence, can save itself from the risk of starting a whole new business of his own.
- The parent company advertises to promote its brand. This saves advertisement expenses of franchisee.
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