分销渠道模式（distribution channel model）

分销渠道模式（DISTRIBUTIONCHANNELMODEL）THEESTABLISHMENTOFENTERPRISEMARKETINGCHANNELISUSUALLYINFLUENCEDBYMANYFACTORS,SUCHASSOCIETY,POLITICS,CULTUREANDLAWTHEREFORE,THESPECIFICDISTRIBUTIONCHANNELFORMMAYBEVARIOUSHOWEVER,BEHINDVARIOUSFORMSOFDISTRIBUTIONCHANNELS,DIFFERENTBASICTYPESANDBASICFEATURESCANSTILLBEABSTRACTED,NAMELY,SEVERALBASICPATTERNSAREFORMEDTHESEPATTERNSAREUNIQUE,BUTTHEBASICDIFFERENCEISTHERELATIONSHIPBETWEENCHANNELMEMBERSANDTHEDEGREEOFCOLLABORATION,ASWELLASTHEORGANIZATIONINORDERTOACHIEVETHISLEVELOFCOLLABORATIONFIRST,THELOOSEDISTRIBUTIONMODETHELOOSEMODEISATRADITIONALMARKETINGMODE,WHICHISVERYPOPULARWHENTHEMARKETECONOMYISNOTVERYDEVELOPED,ANDALARGENUMBEROFPRODUCTIONSYSTEMSHAVENOTYETFORMEDSCALEINTODAYSMOREDEVELOPEDMARKETECONOMYCOUNTRIES,SUCHAMODELSTILLEXISTSAGRICULTURALPRODUCTSDUETODISPERSIONANDITSSEASONALPRODUCTION,THROUGHAVARIETYOFSALESORGANIZATIONMAKEITSPRODUCTSINTOTHEMARKETMANYSMALLANDMEDIUMENTERPRISESBECAUSEOFITSFINANCIALANDSALESFORCEISLIMITED,ALSOMUSTRELYONTHEMARKETANDSALESORGANIZATIONTOSELLPRODUCTSSOMESPECIFICINDUSTRIESDUETOITSINDUSTRYCHARACTERISTICSANDTRADITIONALPRODUCTS,STILLFOLLOWTHELOOSEDISTRIBUTIONMODEL1CHARACTERISTICSOFLOOSEDISTRIBUTIONMODE1MEMBERSAREINDEPENDENTENTERPRISESINPROPERTYRIGHTSANDMANAGEMENTINTHELOOSEDISTRIBUTIONMODE,THEMEMBERSARECOMPOSEDOFINDEPENDENTPRODUCERS,WHOLESALERSANDRETAILERSEACHMEMBERPURSUESTHEMAXIMIZATIONOFTHEIROWNINTERESTSASANINDEPENDENTENTERPRISEENTITY2THEREISALACKOFTRUSTBETWEENNETWORKS,ANDTHEREISINSTABILITYINTHISMODEL,EACHMEMBERISSELFCENTREDDECISIONMAKING,ANDTHEDECISIONISONLYTOCONSIDERITSOWNCOST,SCALE,INVESTMENTEFFICIENCY,ETCTHEWHOLECHANNELLACKSTHEUNIFIEDGOAL,ANDTHEDECISIONMAKINGPOWERISSCATTEREDAMONGEVERYMEMBEROREVERYCHANNELTHEREISNODEFINITEDIVISIONOFLABORAMONGTHEMEMBERS3MEMBERSESTABLISHCONTACTBYBARGAININGANDBARGAININGINTHISMODEL,EACHMEMBERISCONCERNEDABOUTWHETHERTHEGOODSCANENTERTHENEXTDISTRIBUTIONLINK,ANDRARELYCONSIDERTHEOVERALLINTERESTSOFTHECHANNELFORTHISREASON,THELINKSAMONGMEMBERSAREESTABLISHEDTHROUGHNEGOTIATIONANDBARGAININGBECAUSEOFTHELACKOFTRUSTBETWEENMEMBERS,HAVEEXTREMELYFREEIMPORTCHANNELS,TRADINGRELATIONSHIPDOESNOTEXISTOTHERRELATIONSHIPSANDCONSTRAINTS,SOTHERELATIONSHIPBETWEENNETWORKMEMBERSISLOOSETWOEVALUATIONTHELOOSEDISTRIBUTIONMODEHASSOMEADVANTAGESANDLIMITATIONSTHEADVANTAGEISTHATTHEENTERPRISEMUSTKEEPTHEATTENTIONOFTHEMARKET,CONTINUOUSLYIMPROVETHEMANAGEMENTOFPRODUCTIMPROVEMENTTOREDUCETHEPRICE,TOMAINTAINTHECOMPETITIVENESSOFTHEIRPRODUCTSANDTHEMIDDLEMANANDCONSUMERAPPEAL,THISPRESSUREWILLCONTINUETOURGEPRODUCERSINADDITION,DUETOTHEMIDDLEMANSINDEPENDENTSTATUS,THEYTENDTOBEMOREREPRESENTATIVEOFTHEINTERESTSANDDEMANDSOFCUSTOMERS,FORTHEIRPRODUCTSINTHEMARKETWILLPICKANDCHOOSETHEROLEOFTHELAWTOELIMINATEMANYUNQUALIFIEDENTERPRISES,INORDERTOEXPANDTHEMARKETSHAREOFTHEINDUSTRYOUTSTANDINGENTERPRISESTHEDISADVANTAGEISTHATPRODUCERSCANNOTIMPLEMENTANDIMPLEMENTTHELONGTERMMARKETSTRATEGYBECAUSEOFTHESHORTTERMEFFECTOFMIDDLEMEN,SOTHEYMAYLOSELONGTERMINTERESTSDUETOTHELACKOFCOOPERATIONAMONGTHENETWORKMEMBERS,PRODUCERSCANNOTGETALLKINDSOFFEEDBACKFROMMIDDLEMENDUETOTHEINSTABILITYOFTHENETWORKANDTHEINSTABILITYOFTHESALES,THEPRODUCERSHAVETOTAKEGREATRISKSINESTABLISHINGANDENSURINGTHENORMALOPERATIONOFLARGESCALESPECIALIZEDPRODUCTIONSYSTEMSSINCECHINASREFORMANDOPENINGUP,ALARGENUMBEROFENTERPRISESFROMTHEPLANNEDSYSTEMTOFINDTHEMARKET,RUNTHEMARKET,ANDSOONFLOURISHEDTHEMARKETBUTWITHTHECOMPETITIVESITUATION,ECONOMICDEVELOPMENT,NEWLAWSANDREGULATIONS,TECHNOLOGICALPROGRESS,THEUNCERTAINSHORTTERMDISTRIBUTIONMODEWILLHINDERTHESTABLEOPERATIONOFPRODUCTIONENTERPRISESINCHINASHOULDSEIZETHEOPPORTUNITYANDCREATECONDITIONSTOCHANGETHEMODEOFDISTRIBUTIONCHANNELSTWO,THECOMPANYDISTRIBUTIONMODELTHECOMPANYTYPEDISTRIBUTIONMODEREFERSTOACOMPANYOWNEDANDCONTROLLEDSEVERALPRODUCTIONAGENCIES,INSTITUTIONS,INSTITUTIONSSUCHASWHOLESALERETAIL,CONTROLANUMBEROFDISTRIBUTIONCHANNELSANDALLCHANNELS,COMPREHENSIVEMANAGEMENTANDUNIFIEDMANAGEMENTOFCOMMODITYPRODUCTION,WHOLESALEANDRETAILBUSINESS1CHARACTERISTICSOFTHECORPORATEDISTRIBUTIONMODEL1PROPERTYRIGHTSANDMANAGEMENTINTEGRATIONDISTRIBUTIONCHANNELMEMBERSCONTACTISBUILTONTHEPROPERTYONTHEBASISOFTHEUNITYOFMUTUALCOOPERATIONRELATIONSHIP,THROUGHTHEENTERPRISEINTERNALMANAGEMENTORGANIZATIONANDMANAGEMENTSYSTEMANDMETHOD,AHIERARCHICALSTRUCTURETOMAINTAINLONGTERMANDSTABLEDEPARTMENTSORINSTITUTIONS,CLOSELYCONNECTEDWITHALLASPECTSFROMPRODUCTIONTOCONSUMPTIONTHEYCARRYOUTINTERNALCOMMODITYEXCHANGEANDTRANSFERINACCORDANCEWITHTHECOMPANYSPLANNINGOBJECTIVESANDMANAGEMENTREQUIREMENTS,ANDCOMPLETETHEPRODUCTIONANDDISTRIBUTIONPROCESSOFTHEWHOLECOMPANYSYSTEMTHE2WAYISINVESTMENTANDMERGERTHECOMPANYTYPEDISTRIBUTIONPATTERNFORMATIONISMAINLYINTWOWAYSTHROUGHANINVESTMENTTOSETUPNEWBRANCHESTOFORM,SUCHASTHEPRODUCTIONOFENTERPRISESTOINVESTTOESTABLISHSALESCOMPANYTWOISTHROUGHENTERPRISEMERGERS,MERGERSANDOTHERINSTITUTIONSWILLFORMTHECOMPANYSYSTEMANDFORM,SUCHASTHELARGERETAILENTERPRISESTOPURCHASEPRODUCTIONBUSINESSOWNERSHIPTHEPRODUCTIONOFAVARIETYOFWHOLESALEANDRETAILENTERPRISEMERGERMECHANISM3BASICTYPESARECONTROLLEDBYPRODUCTIONENTERPRISESANDCOMMERCIALENTERPRISESRESPECTIVELYTHEREARETWOBASICTYPESOFCOMMODITYDISTRIBUTIONMODESTHEFIRSTONEISOWNEDANDMANAGEDBYPRODUCTIONENTERPRISES,ANDTHEOTHERISBYMEANSOFPRODUCTIONANDBUSINESSINTEGRATIONTHESECONDISTHEOWNERSHIPANDMANAGEMENTOFCOMMERCIALENTERPRISESFOREXAMPLE,ROBOCKHILLSOWNSMORETHAN3000RETAILSTORESINTHEWORLD,ANDABOUT30OFITSPRODUCTSAREMADEBYPRODUCTIONENTERPRISESWITHACERTAINSTAKEINTHECOMPANYTWOADVANTAGESOFTHECOMPANYBASEDDISTRIBUTIONMODEL1ISCONDUCIVETOTHEESTABLISHMENTOFAUNIFIEDCORPORATEIMAGEANDBRANDBECAUSEEACHLINKFROMPRODUCTIONTOFINALCONSUMPTIONINTHEPROCESSAREPLACEDUNDERTHECONTROLOFASINGLEENTERPRISE,SOITCANBEALWAYSINACCORDANCEWITHTHEUNIFIEDOBJECTIVES,PLANSANDSPECIFICATIONSTOPROVIDESERVICES,SOTHATCUSTOMERSCANATANYTIMEANDPLACECANOBTAINTHESAMEQUALITYANDPRICEOFPRODUCTSANDSERVICES,SOTHATENTERPRISESCANESTABLISHAUNIFIEDIMAGEINTHEMARKETTHERAPIDINCREASEANDMAINTAINBRANDAWARENESSANDREPUTATION,GAINACOMPETITIVEADVANTAGE2MAXIMIZEPROXIMITYTOENDCONSUMERSEACHMEMBEROFALOOSEDISTRIBUTIONMODELCARESONLYABOUTITSOWNINTERESTS,ANDISONLYRESPONSIBLEFORPUSHINGTHEPRODUCTTOTHENEXTSTEPWITHOUTCARINGABOUTMARKETCHANGESTHECOMPANYTYPEDISTRIBUTIONPATTERNCHANGEDTHISSITUATION,BECAUSETHEPRODUCTIONMECHANISMANDWOE,PROPERTYSALESAGENCY,SOTHECOMPANYCANCONTACTDIRECTLYWITHTHECUSTOMER,UNDERSTANDTHEMARKETINFORMATION3,THECHANNELEFFICIENCYISHIGHER,THESTRUCTUREISSTABLE,ANDTHEDISTRIBUTIONCOSTISREDUCEDDUETOTHECLOSERELATIONSHIPBETWEENMEMBERSOFTHECHANNEL,UNIFIEDCOMMAND,SOITCANIMPROVETHEDEGREEOFDIVISIONANDCOOPERATION,REDUCETRANSACTIONLINKS,SIMPLIFYTHEDISTRIBUTIONPROCESS,SOTHATGOODSCANENTERTHECONSUMERFIELDMOREQUICKLYINADDITION,THEDISTRIBUTIONCHANNELSTRUCTUREISSTABLE,REDUCINGTHECOSTANDRISKOFMEMBERCHANGE,BUTALSOGREATLYREDUCETRANSACTIONCOSTS4GETRIDOFTHECONTROLOFCIRCULATIONENTERPRISESPRODUCERSOFGOODSFORVARIOUSREASONSINTHEMARKETCANNOTBEFULLYDEMONSTRATED,BROKERSTENDTORELYONTHEIRDISTRIBUTIONCHANNELSTOCONTROLTHETHREATOFPRODUCERS,SOMEINTERMEDIARIESANDEVENTHE“ENTRANCEFEE“AND“SPONSORSHIPFEE“AND“ADVERTISING“,“ONTHESHELFFEEINTHENAMEFROMTHE“EXORBITANTTAXLEVIES“THECOMPANYBASEDDISTRIBUTIONMODELCANAVOIDTHEABOVEPROBLEMS5ENSURELONGTERMSTRATEGYIMPLEMENTATIONSHORTTERMBEHAVIOROFTENDAMAGESTHELONGTERMINTERESTSOFTHECOMPANY,ANDTHECOMPANYTYPEDISTRIBUTIONMODECANAVOIDSHORTTERMBEHAVIORANDIRRESPONSIBLEPHENOMENON,SOASTOENSURETHELONGTERMIMPLEMENTATIONOFTHELONGTERMSTRATEGYTHREETHEDEFECTSOFTHECOMPANYSDISTRIBUTIONMODE1,HIGHINVESTMENTCOSTWHETHERITISHOLDING,MERGER,MERGER,ACQUISITION,ORINVESTMENTCOMPANYTOESTABLISHUNIFIEDPROPERTYUNDERTHECONTROLOFTHEDISTRIBUTIONCHANNEL,THECOMPANYNEEDSTOOCCUPYMOREFUNDS,THEINITIALINVESTMENTCOSTISHIGH,BRINGGREATERFINANCIALPRESSURETOTHEDAILYBUSINESSACTIVITIES2,THEMANAGEMENTCOSTISBIGWHENTHEPRODUCTION,OPERATIONANDSALESAREUNIFIEDINAENTERPRISE,REQUIRESMANAGEMENTPROCEDURESANDPERFECTSYSTEMOFENTERPRISEMANAGEMENTMECHANISM,IMPROVETHEQUALITYMANAGEMENTPERSONNEL,WITHTHECOMPLETIONOFTHEMANAGEMENT,ORGANIZATION,COORDINATIONANDSUPERVISIONOFTHEWORKOFENTERPRISESTHEREFORE,THECOSTOFMANAGEMENTISVERYHIGH3POORFLEXIBILITYONCETHECOMPANYSDISTRIBUTIONMODEHASBEENFORMED,ITSDISTRIBUTIONFORMISRELATIVELYFIXEDWHENTHEMARKETENVIRONMENTANDBUSINESSOBJECTIVESCHANGE,THISFORMISDIFFICULTTOCHANGEIMMEDIATELYTHREE,MANAGEMENTBASEDDISTRIBUTIONMODELMANAGEMENTDISTRIBUTIONPATTERNIS,FROMTHELOOSETYPEANDCOMPANYTYPEMODELONTHEONEHAND,ITISCOMPOSEDOFINDEPENDENTBUSINESSENTITIESONTHEOTHERHAND,THEREISACLOSECONTACTANDCOORDINATIONBETWEENMEMBERSOFTHECHANNEL1CHARACTERISTICSANDADVANTAGESOFMANAGEDDISTRIBUTIONMODELCOMPAREDWITHTHELOOSEANDCORPORATEDISTRIBUTIONMODE,THEMANAGEMENTTYPEDISTRIBUTIONMODEHASITSOWNCHARACTERISTICSANDCOMPETITIVEADVANTAGES1,THESTATUSOFMEMBERSOFTHECHANNELISVERYDIFFERENTINTHEMANAGEMENTOFDISTRIBUTIONMODE,THEREISUSUALLYONEORAFEWCOREENTERPRISES,THESEENTERPRISESBECAUSEOFITSOWNSTRONGASSETSTRENGTH,THESCALEOFPRODUCTION,GOODREPUTATIONANDBRANDREPUTATION,SOTHATITHASASUPERIORPOSITIONINTHECHANNELSYSTEM,AGREATINFLUENCEONOTHERMEMBERSOFTHENETWORKBECAUSEOFTHIS,AGROUPOFINTERMEDIARIESWILLINGTOACCEPTTHEGUIDANCEOFTHECOREENTERPRISE,BECOMEAMEMBEROFTHECHANNEL,AROUNDTHECOREENTERPRISESANDTHEIRPRODUCTSLAUNCHEDDISTRIBUTIONACTIVITIES2CHANNELMEMBERSHAVERELATIVEINDEPENDENCEMEMBERSOFDISTRIBUTIONCHANNELSAREINDEPENDENTENTITIESINPROPERTYRIGHTS,ANDTHEYALLHAVETHEIROWNMATERIALINTERESTSTOTHISEND,THECOREENTERPRISESCANAVOIDTHELARGEINVESTMENTANDFLEXIBILITYPROBLEMSOFTHECOMPANYTYPEDISTRIBUTIONMODECONSTRUCTIONCHANNELSTHERELATIVESTABILITYOFTHERELATIONSHIPAMONG3CHANNELMEMBERSTHERELATIONSHIPBETWEENTHEMEMBERSOFTHEMANAGEMENTMODELISBASEDONTHEUNIFIEDMANAGEMENTBYTHECOREENTERPRISECOOPERATIONANDCOORDINATIONONTHEBASISOF,INCOMPLIANCEWITHTHECOREOFENTERPRISEMANAGEMENT,COORDINATIONANDGUIDANCE,TOESTABLISHAHIGHERDEGREEOFCOOPERATION,UNIFIEDDISTRIBUTIONANDSHARINGOFINFORMATIONRESOURCES,THECHANNELISRELATIVELYSTABLE4DISTRIBUTIONOBJECTIVESTENDTOCOORDINATEDUETOTHEINFLUENCEOFTHECOREENTERPRISEANDSTABLERELATIONSHIPBETWEENMEMBERS,MEMBERSOFTHEINTERESTSBETWEENTHETARGETWILLBEDISPERSED,THECONTRADICTIONOFINDIVIDUALBENEFITMAXIMIZATION,TOMAXIMIZETHEDISTRIBUTIONCHANNELSOFTHELONGTERMINTERESTS,THEINTERESTSOFALLMEMBERSSUBJECTTOTHEOVERALLGOALOFBENEFITMAXIMIZATIONTWOTHEROLEOFCOREENTERPRISESANDTHEINTERESTSOFCHANNELMEMBERSTHECOREENTERPRISEISTHECENTERANDSOULOFTHEMANAGEMENTDISTRIBUTIONCHANNELASTHE“MANAGER“OFTHECHANNEL,THECOREENTERPRISEISTHEINITIATOROFTHECHANNELFORMATION,THECREATOROFTHENETWORKPLAN,THELEADERANDSUPERVISOROFTHENETWORKOPERATIONTHEROLEOFCOREENTERPRISESINDISTRIBUTIONCHANNELSISMAINLYREFLECTEDINTHEDISTRIBUTIONCHANNELS1TOFORMULATEAUNIFIEDMANAGEMENTOBJECTIVEBUSINESSOBJECTIVESINCLUDESALESVOLUME,MARKUPLEVEL,PROFITMARGINS,ANDVARIOUSPOSSIBLEDISCOUNTFACTORSANDRANGESINSALES2INVENTORYPLANITINCLUDESINVENTORYTURNOVERRATE,COMMODITYCLASSIFICATIONGUIDANCE,ESSENTIALCATALOGUEANDINVENTORYLEVELOFEACHMEMBER3COMMODITYDISPLAYPLANANDGUIDANCEHELPMEMBERENTERPRISESTOARRANGEANDINSTRUCTTHESTOREFURNISHINGS,MERCHANDISESTORELAYOUT,TOPROVIDETHENECESSARYEQUIPMENT,FURNISHINGSPRODUCTINTRODUCTIONMATERIALS,SAMPLESANDPRICETAG4PERSONNELSALESPLANRECOMMENDSTANDARDIZEDSALESLANGUAGEANDSALESPRESENTATIONPROCEDURESTOMEMBERENTERPRISES,TRAINSALESPERSONNEL,ANDESTABLISHINCENTIVESTOENCOURAGESALESPERSONNEL5ADVERTISINGPLANANDPROMOTIONPLANARRANGEADVERTISINGCAMPAIGNSANDMAKEFINANCIALBUDGETS,SELECTAPPROPRIATEMEDIA,ANDIDENTIFYTOPICSOFPUBLICITYANDMARKETING6TOFORMULATERELEVANTDUTIESANDSUPERVISETHEINSPECTIONRESPONSIBILITIESANDTASKSOFTHEMANUFACTURER,RESPONSIBILITIESANDTASKSOFTHEDISTRIBUTORS,ETCTHEMANAGEMENTOFDISTRIBUTIONCHANNELSCANBEFORMED,ANDAHIGHEFFICIENCYDISTRIBUTIONORGANIZATION,VARIOUSDISTRIBUTIONAGENCIESHAVEBEENABLETOPARTICIPATEINTHEMANAGEMENT,ORACCEPTTHEMANAGEMENT,THEFUNDAMENTALREASONISTHATEACHMEMBERCANGETBENEFITSFORTHECOREENTERPRISESANDOTHERPRODUCTIONENTERPRISES,THEMAINADVANTAGECANGREATLYIMPROVEPRODUCTSALESANDPROFITABILITYTOAVOIDORREDUCETHEMUTUALCOMPETITIONEXPANDTHESCALEOFPRODUCTIONANDDISTRIBUTION,THESCALEECONOMYISREMARKABLE,ANDTHEPROMOTIONACTIVITIESARESUSTAINABLE,STABLEANDPLANNEDITISEASYTOCONTROLANDMASTERTHESALESACTIVITIESOFVARIOUSDISTRIBUTIONINSTITUTIONS,WHICHGREATLYFACILITATESTHEPRODUCTIONSCHEDULINGANDINVENTORYMANAGEMENTFORAVARIETYOFDISTRIBUTORS,THEBENEFITSARETOTIMELYANDFULLYOBTAINTHESUPPLYOFGOODSCANARRANGEBUSINESSRESOURCESBETTERREDUCETHEINVENTORYOFGOODSANDFUNDSAVAILABLEQUALITYASSURANCEMANUFACTURERSANDSERVICESTOLEARNTHECOREENTERPRISEMANAGEMENTEXPERIENCEFOUR,FRANCHISEDISTRIBUTIONCHANNELMODELFRANCHISINGREFERSTOTHEFRANCHISEEINACCORDANCEWITHTHECONTRACTREQUIREMENTSANDCONSTRAINTSTOJOINCERTAINRIGHTS,ALLOWINGBRANDSTOJOINTHEBUSINESSUSEOFTHEFRANCHISEESTRADEMARK,PATENTPRODUCTS,TECHNOLOGYANDMANAGEMENTMODEOFTHECOMMERCIALACTIVITIESANDMODEOFOPERATION1TYPESOFFRANCHISETHETYPESOFFRANCHISECANBECLASSIFIEDINTOTHEFOLLOWINGPOINTSACCORDINGTODIFFERENTDIVISIONMETHODS1DIVIDEACCORDINGTOTHEREQUIREDFUNDSACCORDINGTOTHEREQUIREDCAPITALINPUT,ITCANBEDIVIDEDINTOWORKINGTYPEFRANCHISING,BUSINESSTYPEFRANCHISINGANDINVESTMENTTYPEFRANCHISINGASLONGASTHEFRANCHISEESINVESTVERYLITTLEMONEY,SOMETIMESTHEYDONTEVENNEEDABUSINESSPLACEBUSINESSFRANCHISEGENERALLYNEEDSTOPURCHASEGOODS,EQUIPMENTANDBUSINESSPLACES,SUCHASPRINTINGPHOTOS,LAUNDRY,FASTFOODTAKEAWAY,SOTHENEEDFORGREATERINVESTMENTINVESTMENTBASEDFRANCHISINGREQUIRESMORECAPITALINVESTMENT,SUCHASHOTELS2ACCORDINGTOTHETRANSACTIONFORMBYTHETRANSACTIONINTHEFORM,CANBEDIVIDEDINTOFOURTYPESMANUFACTURERSTOWHOLESALERSFRANCHISE,SUCHASCOCACOLAAUTHORIZEDBOTTLERSWHOLESALERSTOBUYCONCENTRATEDLIQUID,THENCARBONATEDBOTTLEDANDDISTRIBUTEDTORETAILERSTOMANUFACTURERSFRANCHISERETAILERS,SUCHASOILCOMPANIESONTHEGASSTATIONBETWEENTHEWHOLESALERSTORETAILERSFRANCHISEFRANCHISE,SUCHASPHARMACEUTICALCOMPANIES,PHARMACEUTICALRETAILFRANCHISESTORESFRANCHISEAMONGRETAILERS,SUCHASCHAINGROUPSUSETHISFORMOFRECRUITMENTFRANCHISESTORE,EXPANDTHESCALEOFOPERATION3ACCORDINGTOTHENATUREOFTHEFRANCHISEEACCORDINGTOTHENATUREOFFRANCHISEES,ITCANBEDIVIDEDINTOREGIONALFRANCHISING,SINGLEFRANCHISINGANDCOMPOUNDFRANCHISINGREGIONALFRANCHISEREFERSTOTHEFRANCHISEETOOBTAINACERTAINAREAOFEXCLUSIVEFRANCHISE,INTHEREGIONCANBEOPERATEDALONE,CANALSOBEAUTHORIZEDFRANCHISEESSINGLEFRANCHISEREFERSTOTHEFRANCHISEEWHOLEHEARTEDLYDEVOTEDTOFRANCHISEBUSINESS,NOLONGERENGAGEDINOTHERBUSINESSCOMPOUNDFRANCHISEREFERSTOTHEFRANCHISEISPURCHASEDBYANUMBEROFFRANCHISECOMPANIES,BUTTHECOMPANYITSELFISNOTINVOLVEDINTHEDAILYOPERATIONOFFRANCHISESTORES4ACCORDINGTOFRANCHISEBUSINESSDIVISIONACCORDINGTOTHEFRANCHISEBUSINESS,ITCANBEDIVIDEDINTOCONVERSIONFRANCHISEANDBRANCHTYPEFRANCHISINGTHEFORMERISTHEFRANCHISEETOCONVERTTHEEXISTINGBUSINESSINTOFRANCHISINGBUSINESS,ANDFRANCHISEESOFTENUSETHISSTYLETOENTERTHEGOLDENZONETHELATTERISTHEFRANCHISEETHROUGHTHETRADITIONALFORMTOINCREASEBRANCHSTORES,OFCOURSE,NEEDTOSPENDMOREMONEYCASEANDENLIGHTENMENTTHEEARLYYEARSOFTHEFRANCHISEISTHEPRODUCTTRADEMARKFRANCHISE,ATTHISSTAGE,TOPROVIDETHEFRANCHISEETOFRANCHISEESISONLYTHERIGHTTOUSETHETRADEMARKGOODSAND,INRETURN,THEFRANCHISEEREGULARLYPAIDTHEFRANCHISEEFOREXAMPLE,GENERALMOTORS,FORDMOTORCO,AIKESENOILCOMPANY,SHELLCOMPANIES,COCACOLACO,MCDONALDSCORPHAVETAKENTHISWAYOFDOINGBUSINESS,WHICHISALSOCALLED“THEFIRSTGENERATIONOFFRANCHISE“HOWEVER,THE“FIRSTGENERATIONFRANCHISE“ENCOUNTEREDINPRACTICEASERIESOFPROBLEMS,THESAMEISTRUEOFMCDONALDSCORPMCDONALDSBROTHERSSTARTEDTHEAUTORESTAURANTIN1937BYIMPROVINGTHEKITCHENEQUIPMENTANDPRODUCTIONPROCEDURES,THEPRODUCTIONSPEEDOFHAMBURGWASGREATLYIMPROVED,ATTRACTINGALARGENUMBEROFCUSTOMERSINTHEEARLY1920S,MCDONALDSESTABLISHEDITSOWNMANAGEMENTSYSTEMINTHEFORMOFFRANCHISINGINTHEBEGINNING,THEYADOPTEDTHE“FIRSTGENERATIONFRANCHISE“,THATIS,ONLYINTHEBEGINNINGOFTHESHOPTOGUIDETHEDETAILSOFTHESHOPAPPEARANCEANDDELIVERYSERVICE,AFTERTWOIRRELEVANTTHISQUOTTHEWITHDRAWALOFTHE“WAY“CAUSEDACRISIS,MANYFRANCHISEESINACCORDANCEWITHTHEIROWNUNDERSTANDINGOFTHEHAMBURGERTASTECHANGE,ANDSOMEEVENINCREASEALOTOFCOMPLEXVARIETIES,THISISTHEEROSIONOFTHEWAYMCDONALDSOPERATES“MCDONALDSSEESTHATIN1955,MCDONALDSOPENEDTHEFIRST“MODELSTORE“INNORTHEASTCHICAGO,ANDESTABLISHEDASTRICTOPERATINGSYSTEM,QSCVOPERATINGSYSTEM,THATIS,HIGHQUALITYSERVICE,GOODQUALITY,DELICIOUS,CLEAN,HEALTH,ANDPROVIDEVALUEWITHTHEHELPOFMCDONALDSBUSINESSMODELTHATTHESECONDGENERATIONOFTHEFRANCHISE,ALLMCDONALDSUSEOFSPICES,MEATANDVEGETABLESQUALITYALLOVERTHEWORLDAREUNIFIEDBYTHEPROVISIONSOFTHECOMPANY,THEPRODUCTIONPROCESSISCOMPLETELYLIKE,EACHLAUNCHOFANEWVARIETY,THEREAREASETOFRULESMCDONALDSRELIEDONTHISKINDOFMANAGEMENTTOMAKEITDEVELOPRAPIDLYTWOFRANCHISETIESWHATLINKSDOFRANCHISEESUSEASALINKTOFRANCHISEESANDFRANCHISEES1TRADEMARKPRODUCTTRADEMARK,STORENAMEANDSERVICEBRANDARETHESIGNSOFANATURALORLEGALPERSONPRODUCTORSERVICETHATCANBECLEARLYDESCRIBEDNOMATTERWHATKINDOFFRANCHISE,TRADEMARKISTHEBASICFACTOROFFRANCHISING,ANDISTHECORNERSTONEOFITSSYSTEMAFTERTHESIGNINGOFTHEFRANCHISEAGREEMENT,THEFRANCHISOROFFERSTHETRADEMARKTOTHEFRANCHISEE,ANDHASTHEOBLIGATIONTOSTRICTLYMAINTAINTHEIMAGEANDREPUTATIONOFTHETRADEMARK2SPECIALSKILLSSPECIALSKILLSAREANIMPORTANTPARTOFMODERNFRANCHISINGTHEEUROPEANCOMMUNITYHASDEFINEDSPECIALSKILLS,WHICHMUSTBECONFIDENTIAL,SUBSTANTIVEANDIDENTIFIABLETHESOCALLEDSECRET,THATIS,SPECIALSKILLSAREORIGINAL,CANNOTBEOBTAINEDUNLESSTHEYARECONNECTEDWITHSPECIALBUSINESSSUBSTANTIVEMEANSTHATSPECIALSKILLSMUSTBEUSEFULTOFRANCHISEESANDHELPTHEMTOBRINGBENEFITSDIFFERENTIATIONMEANSTHATSPECIALSKILLSCANBEDESCRIBEDINANEXACTWAYTOPROVETHATITCANSATISFYCONFIDENTIALITYANDSUBSTANTIALCONDITIONS3BUSINESSMODELTHEFRANCHISEEISNOTONLYPROVIDEDTOTHEFRANCHISEETRADEMARK,SPECIALSKILLS,BUTALSOPROVIDEASETOFMARKETINGANDMANAGEMENT,INCLUDINGTRAINING,SITESELECTION,BEHAVIORNORMSANDFINANCIALSYSTEMTHREEFRANCHISEADVANTAGEFRANCHISEHASBEENMORETHAN100YEARSOFDEVELOPMENTHISTORY,ANDITSSUCCESSHASATTRACTEDWORLDWIDEATTENTIONINRECENTYEARS,FRANCHISINGHASALSOMADEGREATPROGRESSINCHINATHISDISTRIBUTIONMODEISPROSPEROUSANDHASITSOPERATINGADVANTAGES1FRANCHISEESUSEFRANCHISINGTOCARRYOUTLARGESCALELOWCOSTEXPANSIONFORFRANCHISOR,WITHTHEFORMOFFRANCHISING,THEFOLLOWINGADVANTAGESCANBEOBTAINED1THEFRANCHISORCANMAINTAINASMALLERSCALEATTHESAMETIMEOFCENTRALIZEDCONTROL,NOTONLYTOEARNREASONABLEPROFIT,BUTALSONOTINVOLVEHIGHCAPITALRISK,ANDDONOTTAKEINTOACCOUNTTHEDAILYCHORESOFTHEFRANCHISEE2BECAUSEFRANCHISEESHAVEADEEPERUNDERSTANDINGOFTHEREGION,ITISOFTENEASIERTOFINDOUTTHESCOPEOFBUSINESSNOTYETINVOLVEDINTHEBUSINESS3BECAUSETHEFRANCHISORDOESNOTNEEDTOPARTICIPATEINTHEMANAGEMENTOFTHEEMPLOYEESO