Joint business activity and its legal forms. Joint forms of entrepreneurial activity

In joint business activities, a commodity producer organizes business in foreign markets with the involvement of local partners or partners from third countries. At the same time, the parent company is not the full owner of the joint structures being created. Forms of joint venture activities: contract manufacturing; international licensing; international franchising; joint venture; strategic alliance; contract management.

Contract manufacturing- a foreign firm, in accordance with the concluded agreement (contract), transfers to some enterprise the manufacture of certain products, which the firm itself sells in attractive markets for it. International Licensing - involves the transfer by the firm (licensor) of the right to own something to a foreign enterprise (licensee), which represents some value for the latter, for which he agrees to perform certain work or pay a specified fee. This right finds its expression in obtaining a license by its applicant.

International franchising- the right to act on behalf of a large firm (franchisee) is given to a small firm or self employed(franchisor) in the foreign market as a result of the conclusion of a contract between them. In accordance with such a contract, the franchisee generally transfers to the franchisor the right to use his name, trademark, technology, and business management system.

Direct investment involves the creation of its own subsidiaries controlled by the company. The structure through which a firm conducts its business activities on a separate foreign market, is 100% owned by her. Among the own structures created by the company, for entering certain foreign markets as part of direct investment, preference is usually given to:

Trade missions;

Foreign sales affiliates - structural subdivision firms in a particular foreign market

Foreign trading companies - own commercial enterprise operating under general management parent company and in accordance with local laws

Foreign enterprises - located in one of the countries in which the company has its subsidiaries and sells goods of a certain assortment group.

Regional centers;

transnational corporations.

The choice of the method of entering the foreign market affects the efficiency of the further functioning of the company. Factors:

Internal factors: the size of the firm and its experience in foreign markets. Small firms it is better to use export opportunities, as they do not have sufficient resources to exercise a greater degree of control over operations. Having international experience. Product characteristics.

External factors: social and cultural differences in individual countries, the presence of business risk in them, the size of the market of each of the countries and its growth rate, the presence of trade barriers, as well as the level of competition and the availability of distribution channels.

Factors characterizing the degree of attractiveness this method entering a foreign market: the level of risk, the possibility of exercising control and flexibility. If the firm does not want to take much risk, it will choose direct or indirect export or licensing methods, since they require less financial participation or management resources.

Factors characterizing transactions in foreign markets.

Joint ventures allow you to share the risk, financial obligations and costs of setting up local distribution networks and hiring local staff. At the same time, significant efforts are required to negotiate the creation of joint ventures and to manage them. However, the method that requires the least resources and effort and is associated with the least risk promises the least benefits and threatens with missed opportunities.

When choosing a method to enter a foreign market, it is important to consider the degree of control that the management of the company will exercise over operations in international market. The level of control is also closely related to the level of resource participation.

Indirect export provides the least control over conditions overseas sales. Maximum control can only be achieved in own subsidiaries with direct investment.

Deciding how to enter the market

Having decided to sell in a particular country, the firm must choose the best way entering the chosen market. She can stop at export, joint venture or direct investment abroad 10 . Each subsequent strategic approach requires taking on more obligations and more risk, but also promises higher returns. All these strategies for entering the foreign market are presented in Fig. 92 with an indication of options for possible actions in each specific case.

Rice. 92. Foreign Market Entry Strategies

Export

The easiest way to enter into activities in a foreign market is to export. Irregular export¾ This is the passive level of involvement, where the firm exports its surplus from time to time and sells goods to local wholesalers representing foreign firms. Active export occurs when a firm aims to expand its export operations in a particular market. In both cases, the firm produces all its goods in own country. For export, they can offer them both in modified and unmodified form. Of the three options export strategy requires minimal changes to the company's product range, its structure, capital expenditures and program of activities.

A firm can export its product in two ways. You can use the services of independent international marketing intermediaries (indirect export) or carry out export operations yourself (direct export). The practice of indirect export is most common among firms that are just starting their export activities. First, it requires less capital investment. The firm does not have to acquire its own vending machine or build a network of contacts. Secondly, it is associated with less risk. International marketing intermediaries ¾ are domestic export merchants, domestic export agents or cooperative organizations that bring their own specific characteristics to this activity. professional knowledge, skills and services, and therefore the seller tends to make fewer mistakes.

joint entrepreneurial activity

Another common direction for entering the foreign market is to join efforts with the commercial enterprises of the partner country in order to create production and marketing capacities. Joint venture activity differs from export in that a partnership is formed, as a result of which certain production capacity. And what distinguishes it from direct investment is that an association is being formed in the partner country with any local organization. There are four types of joint ventures.

LICENSING. This is one of the easiest ways to involve a manufacturer in international marketing. The licensor enters into an agreement with a licensee in a foreign market, offering the rights to use a manufacturing process, trademark, patent, trade secret, or some other value in exchange for a fee or royalty. The licensor gains access to the market with minimal risk, and the licensee does not have to start from scratch, because he immediately gets production experience, a well-known product or name. Through licensing operations, Gerber brought its products to the Japanese market for baby food. The Coca-Cola Company carries out its activities in international marketing by granting licenses to various enterprises in different parts of the world, or, more precisely, by granting them trading privileges, since the company itself provides the concentrate necessary for the production of the drink.

A potential disadvantage of licensing is that it gives the firm less control over the licensee than it does over its newly created business. In addition, if the licensee does well, the profits will go to him, and at the end of the contract, the firm may find that it has created a competitor.

CONTRACT PRODUCTION. Another variant of activity is the conclusion of a contract with local manufacturers for the release of goods. Sears used this method to open its department stores in Mexico and Spain, finding skilled local manufacturers who could make many of the items it sold.

The disadvantage of contract manufacturing ¾ is the firm's less control over the production process and the loss of potential profits associated with this production. At the same time, it enables the firm to expand faster, with less risk, and with the prospect of partnering with or buying a local manufacturer.

CONTRACT MANAGEMENT. In this case, the firm provides the foreign partner with "know-how" in the field of management, and he provides the necessary capital. Thus, the firm does not export a product, but rather management services. This method is used to organize the work of hotels in different parts of the world by the Hilton company.

Contract management ¾ is a way to enter the foreign market with minimal risk and income from the very beginning of activity. However, it is not advisable to resort to it if the company has a limited staff of qualified managers who can be used to a greater advantage for itself, or in the case when the independent implementation of the entire enterprise will bring much greater profits. In addition, contract management for some time deprives the firm of the opportunity to develop its own enterprise.

JOINT OWNERSHIP ENTERPRISES. A co-ownership enterprise ¾ is the bringing together of foreign and local investors to create a local business enterprise that they own and operate jointly. An overseas investor can buy a stake in a local business, a local firm can buy a stake in a foreign company's existing local business, or the two parties can work together to create an entirely new business.

A joint venture may be necessary or desirable for economic or political reasons. The firm may lack the financial, physical, or managerial resources to carry out the project alone. Or perhaps joint ownership is a condition by which a foreign government stipulates admission to the market of its own country.

The practice of joint ownership has certain disadvantages. Partners may disagree on capital investment, marketing, and other operating principles. While many US firms seek to use their earnings to reinvest in expanding their business, local firms often choose to retire these earnings. While US firms play a large role in marketing, local investors can often rely solely on marketing. Moreover, co-ownership can make it difficult for a multinational company to implement specific policies in the field of production and marketing on a global scale.

Direct investment

The most complete form of involvement in activities in the foreign market is the investment of capital in the creation of their own assembly or manufacturing enterprises abroad. As the firm accumulates experience in export work and with a sufficiently large foreign market, manufacturing enterprises abroad promise it clear benefits. First, the firm can save money through cheaper labor or cheaper raw materials, through incentives given by foreign governments to overseas savers, by downsizing; transport costs, etc. Secondly, by creating jobs, the firm provides itself with a more favorable image in the partner country. Third, the firm develops deeper relationships with government bodies, customers, suppliers and distributors of the host country, which makes it possible to better adapt their products to the local marketing environment. Fourth, the firm retains full control over its capital investments and, therefore, can develop production and marketing policies that will meet its long-term objectives on an international scale.

1. INDIVIDUAL ENTREPRENEURSHIP - the simplest and most ancient type of entrepreneurship. In this case, all funds are owned by one owner. He independently decides what, for whom and how to produce; solely manages the proceeds received and bears unlimited liability for the results of its activities. In the case of a debt, for example, an entrepreneur pays with his property. Such a prospect is quite real, because, as statistics show, every year no less individual entrepreneurs go bankrupt than new ones are registered. An individual entrepreneur usually works on his own, but has the right to hire additional workers, concluding an agreement with each of them. Despite the many stories about the millions acquired by hard work and ingenuity, not all individual entrepreneurs manage to seriously expand their business. Growth opportunities are limited by the owner's personal funds and the small loans that he can get from the bank. It also affects the fact that an individual entrepreneur cannot be a specialist in all matters of production, supply, marketing, management, finance, and this often leads to making erroneous decisions, and therefore to economic losses. However, this type of entrepreneurship also has certain advantages, consisting in the minimum regulation of activities, mobility, material interest, etc. In world practice, this form of business is typical for small shops, service enterprises, farms, professional activities of lawyers, doctors and teachers. An entrepreneur who has sufficient resources to create a business, who is inclined to single-handedly control the decision-making process, who is ready to bear full material and legal responsibility for commercial activity, will prefer to become an individual entrepreneur, becoming the sole owner of the company. All other forms of entrepreneurial activity are collective.

1.2. LEGAL ENTITIES: COMMERCIAL AND NON-COMMERCIAL ORGANIZATIONS. An entrepreneur, as a rule, has the opportunity to unite with other entrepreneurs to jointly achieve common economic goals. Joint activities can be based on: 1. on the agreement to conduct a common business, which is reflected in the contract - the agreement of the parties; 2. on the formation of joint property, consisting of shares that are the partners' own property (money, material assets, etc.) and representing contributions as part of common property (share capital). For non-profit organizations, making a profit is not the main goal. They have the right to engage in entrepreneurial activities only insofar as it is necessary to achieve their statutory goals, and the profit is fully used for self-development and is not distributed among the participants. The advantage of this form of business organization is preferential taxation. But it must be emphasized once again that non-profit organizations are not created for the purpose of making a profit. Commercial organizations are created by their founders in order to make a profit. Russian legislation provides for several organizational and legal forms of these organizations. These are business partnerships and companies

2. PARTNERSHIP (PARTNERSHIP)

A partnership (partnership) is an organizational form of entrepreneurship, when both the organization of production activities and the formation of the authorized capital are carried out by a joint effort of two or more persons (individuals and legal entities). Each of them has certain rights and bears certain responsibilities, depending on the share in the authorized capital and the place it occupies in the management structure of such a partnership. Thus, a business partnership is a commercial organization that owns separate property, with authorized or share capital divided into shares (contributions). A partnership may be created: 1. by individuals; 2. individuals and commercial organizations; 3. commercial organizations with authorized (share) capital divided into shares (contributions) of the founders.

In joint business activities, a commodity producer organizes business in foreign markets with the involvement of local partners or partners from third countries. At the same time, the parent company is not the full owner of the joint structures being created.

The ownership of joint structures and control over their entrepreneurial activities are distributed between the parent company and its foreign partners.

Joint ventures have different organizational forms its implementation. The most commonly used organizational forms are:

 contract manufacturing;

 international licensing;

 international franchising;

 joint venture;

 strategic alliance;

 contract management.

Contract manufacturing

Contract manufacturing (contract manufacturing) takes place when a foreign firm, in accordance with the agreement (contract) being concluded, transfers to some enterprise the manufacture of certain products, which the firm itself sells in attractive markets for it. Such markets may be located in one's own country, the country of production of goods, as well as in some other countries.

Objects contract manufacturing

In the practice of firms operating in foreign markets, contract manufacturing is implemented in the manufacture of a wide variety of products and the provision of all kinds of services. However, it is most often used for:

 production of individual parts of products;

 performing individual stages technological process, including the final ones;

 processing or refining of raw materials;

 installation or assembly of finished goods based on the supply of parts and components from different countries;

 complete production finished products foreign enterprise.

All of the above is carried out in accordance with the requirements for the relevant products specified in the concluded contract.

Of the areas listed joint activities in foreign markets, contract manufacturing in the field of industrial production most often it is realized in the manufacture of individual parts of products, as well as in the processing or refinement of raw materials. The latter is preferred

in the implementation of contract manufacturing by trading firms. Such firms quite often resort to the services of foreign firms in the complete manufacture of products.

The use of contract manufacturing to complete process steps is commonly used by pharmaceutical, chemical, textile, and metalworking industries.

Contract manufacturing implemented in foreign markets, carrying out the processing or refining of raw materials, received a special title of tolling.

Basic principles of contract manufacturing

Contract manufacturing is appropriate when the firm has competitive advantages and cannot take full advantage of them. The latter forces the firm to transfer existing advantages to another enterprise. At the same time, having started contract manufacturing, the company continues to develop research, development and marketing activities, conducts service maintenance in foreign markets. The company also exercises control over the quality of work performed, manufactured products, their compliance with internal company standards. It makes timely payments for manufactured products or provides services, setting, as a rule, the amount of payment correlated with a unit of manufactured products.

By concluding a contractual agreement on the production of products, the company reserves a fairly large freedom of action. At the end of the contractual agreement, the firm may enter into a similar agreement with another enterprise if, for some reason, the activity of the initially chosen partner does not suit it. For example, if the quality of manufactured products was unsatisfactory or it was not delivered on time.

The firm can leave this market altogether without any negative consequences for itself, since in this case it does not incur any losses due to the closure of the corresponding production.

Benefits of contract manufacturing

By carrying out contract manufacturing in foreign markets, the firm, of course, believes that by doing so it improves the results of its business activities. This confidence of the firm is due to the presence of a number of factors inherent in contract manufacturing and can have a positive impact on the efficiency of its work. These factors include:

 opportunity to reduce production costs due to the use of cheaper labor, raw materials, transport, etc.;

 overcoming the existing restrictions on the import of finished goods due to the existence of high duties and quotas;

 decrease transport costs, which is especially important for large or bulky goods;

 bringing the production of goods closer to potential consumers, which allows you to better know their needs and requests.

Considering the factors that have a positive impact on the efficiency of contract manufacturing, it should be taken into account that in the actual practice of such joint activities there may be certain problems. Such problems are primarily due to the paramount importance of ensuring the required quality of products and their timely delivery. Therefore, having decided on the expediency of concluding a contractual agreement, the firm should reasonably approach both the selection of the enterprise with which such an agreement will be signed, and the content of this agreement. It should be possible to exercise due control over the quality of manufactured products, to ensure its compliance with internal company standards.

One of the options for contract manufacturing is usually considered as tolling. In this case we are talking on the processing of tolling raw materials at one of the foreign enterprises.

Enterprises operating under the tolling system receive raw materials from the tolling company and supply it with finished products. This firm can buy raw materials both in the domestic and foreign markets. Thus, carrying out operations for the supply of raw materials and finished products, the company is forced to repeatedly cross the borders of individual states. In this regard, a special regime is very important for the tollinger, which would provide him with a number of tax incentives. Otherwise, the cost of production may be too high.

Note that the provision of these benefits in some cases is quite justified. For example, in one of the countries there is an enterprise capable of producing sufficiently high-quality products, which, due to reasons such as lack of raw materials and demand in the domestic market, are temporarily not produced. There is a company that provides the enterprise with raw materials, and also sells the manufactured product. As a result, the degree of employment of the population of the corresponding region increases, more high level his welfare. Each country is interested in this, so many states take this into account and provide the tollinger with a number of tax benefits.

The practice of using contract manufacturing

Contract manufacturing has become widespread in the most various areas human activity. It provides a number of benefits for both parties involved in contractual agreements. These advantages are used by many, including well-known companies. Thus, Beneton and IKEA have entered into contract agreements with many small foreign sewing enterprises, which largely provide their needs for the necessary garments.

Many pharmaceutical companies enter into

contract agreements and entrust the enterprises of other countries with the pressing of medicinal powders into tablets and packaging them for retail through pharmacies.

Textile firms often supply, on the basis of contractual agreements, gray fabrics for processing and dyeing to enterprises in foreign countries.

Other examples can be given effective use contractual agreements in the activities of firms in foreign markets.

International Licensing

One of the most simple ways access to foreign markets is international licensing (International Licensing). Its implementation involves the transfer by the firm (licensor) of the right to own something to a foreign enterprise (licensee), which represents some value for the latter, for which he agrees to perform certain work or make an agreed payment. This right finds its expression in obtaining a license by its applicant.

Legal basis for licensing

The licensor may grant the licensee the right to something useful to him that can improve his industrial and commercial activities. Most often, the licensor transfers to the licensee the right to:

 use of patents for a product or technology;

 obtaining advice and assistance in the implementation of marketing activities;

 use of trademarks, service marks, trademarks;

 use of production and management know-how;

 trade in goods of certain, as a rule, well-known firms.

In addition to the above, license agreements may cover other areas of joint activities of different countries firms. They generally involve scientific, technical, managerial and commercial cooperation of partners on a reimbursable basis. At the same time, when selling or buying a license for products of intellectual activity, the right to the latter remains with their owners. In other words, the right to use is transferred, but not possession.

Types of licenses

Licenses used in foreign markets can be classified according to different criteria. However, most often when classifying them, they take into account:

 availability of legal protection;

 degree of transferable rights;

 area of ​​activity subject to licensing.

Taking into account the existence of legal protection, the license agreements concluded may relate to both patented and non-patented scientific

but-technical or other intellectual products.

Depending on the amount of transferred rights, licenses can be divided into:

 complete;

 exceptional;

 non-exclusive (simple).

A full license grants all rights to use the invention for the remainder of the patent term.

Ownership of an exclusive license allows the licensee to use exclusively the rights granted to him within the limits specified in the final agreement. This applies to both patented and unprotected objects of the license agreement. At the same time, the licensor does not have the right to use the object of licensing in the agreed territory or transfer such a right to third parties. These restrictions do not exist in non-exclusive (simple) licenses. In accordance with such a license, the right to use the object of the license is both granted to the licensee and can be used in the same territory by the licensor, and can also be transferred by the latter to a third party.

Of the other types of licenses, the most commonly used are those

 clean;

 accompanying;

 sublicense;

 returnable;

 forced;

 cross-license.

Under a clean license, the licensee is given the agreed-upon right to use the intangible information. An accompanying license is issued when concluding contracts for the supply of equipment or some other product, without which the supplier's property rights may be violated.

A sublicense is issued by the licensee to a third party in accordance with the right granted to him by the licensor.

If the licensee has improved the object of the license agreement and transferred the right to use the latter directly to the licensor, then the license transferred in this case is called returnable.

In real practice, there are often situations when each of the parties to the license agreement transfers

the right to use the object of intellectual property belonging to it. In this case, mutual granting of rights is provided using cross-licenses.

Finally, compulsory license is provided to the interested licensee by the competent authority for this, if the previously interested invention was not used within the period established by law

ka. However, the consent of the patent owner is not required.

Basic principles of international licensing

Both parties entering into a license agreement are interested in joint activities on the principles of international licensing. At the same time, ongoing studies show that, for the most part, the initiators of such an agreement are licensees. Having received a license for the right to carry out industrial and (or) commercial activities, the licensee bears full responsibility for the results of such activities in the territory specified in the license agreement. He carries out the implementation of marketing and is exposed to all the risks due to the obligations assumed by him.

The licensee shall pay to the licensor the fees stipulated in the license agreement, which in essence constitute the licensor's income from the joint venture. This income usually includes several components, the main of which are:

 lump sum payments at the beginning of granting the right to carry out the relevant activity, including payment for the equipment supplied, components, various documentation and services rendered;

 a minimum royalty, which is some guaranteed annual income;

 current royalty, defined as a certain percentage of the total annual income or of each unit of products sold.

Despite the existence of generally accepted constituent parts license prices, the practice of implementing international licensing has not developed a unified approach to its establishment. There is no single approach to the choice of payment form. Along with direct payments, such forms of payment or licenses are also used, such as:

 transfer of part of the company's shares;

 making counter purchases;

 transfer of rights to use the object of intellectual property;

 transfer of securities.

Simultaneously with the indicated forms of payment for a license, other forms of payment, as well as mixed forms of payment, can be used. The choice of the most appropriate form of payment and the establishment of a reasonable price for a license are carried out in each specific case by agreement between the parties concluding a license agreement.

Prerequisites for using international licensing

As already emphasized above, the use of international licensing is beneficial both to the one who grants the license and to the one to whom the license is intended. At the same time, the main factors determining the expediency of concluding a license agreement for the licensor are:

 the possibility of entering foreign markets when other ways are

the implications of this are generally unacceptable or less desirable;

 making a profit both through royalties and through the supply of goods and components required by the licensor;

 possibility of extension life cycle goods by bringing them to the markets of developing countries;

 reducing the risks of doing business in foreign markets;

 the possibility of entering foreign markets with limited financial, managerial or marketing resources, which is especially important for small firms;

 the ability to concentrate efforts on the development of a product specializing in this firm and then transfer its production and distribution

movement to other businesses.

Along with the above factors that have a positive impact on the efficiency of the licensor's business activities, there are also factors in foreign markets that favorably affect the activities of the licensee. These factors include:

 opportunity enough rapid development a licensee through obtaining licenses for new technologies;

 reduction of costs associated with the development and launch of mass production new goods for the licensee;

 the possibility of increasing the licensee's cash income.

The positive influence of the factors noted above is not always fully used by the parties that have entered into a license agreement. Moreover, the insufficiently substantiated use of international licensing can not only have a positive impact on the joint activities of the parties having a license agreement, but also create certain problems for each of them. For example, a buyer of a license in a foreign market is essentially a competitor of the licensor and, by gaining access to know-how, can strengthen its competitive position and become one of the main competitors in the target market after the license expires. In turn, the acquisition of a license by the firm may initially lead to an increase in its income, but in the long run the profit received by the firm will decrease. Therefore, both the licensor and the licensee must take a responsible approach to the development and adoption of management decisions to avoid possible specified or similar negative consequences for each of the parties, thereby ensuring their effective joint business activities.

The license agreement between the parties must be in writing. The individual details of such an agreement must be carefully discussed by the parties, and only after comprehensive negotiations can the final agreement be signed. At the same time, it is desirable that, as a licensor,

so the licensee included certain clauses in this agreement, the presence of which could protect them from undesirable negative consequences for each of the parties.

International franchising

Franchising (International Franchising) has become one of the most common ways to enter foreign markets. The term "franchising" is borrowed from French franchising and literally means "right" or "privilege". Such a right to act on behalf of a large firm (franchisee) is obtained by a small firm or a private entrepreneur (franchisor) in a foreign market as a result of a contract concluded between them. In accordance with such a contract, the franchisee generally transfers to the franchisor the right to use his name, trademark, technology, and business management system. The territory on which the franchisor will carry out its activities is also specified, as well as the period of this activity is indicated, the franchisee monitors the work of the franchisor and provides him with all possible assistance if necessary.

The franchisor undertakes to carry out its activities in accordance with the requirements of the franchisee specified in the contract. He is obliged to regularly pay the franchisor certain amounts of money for the business system provided to him, which is usually called a franchise.

Formation and development of franchising

There are at least two opinions regarding the formation and development of franchising. Many believe that franchising as a form of doing business appeared in 1945 in the USA with the opening of an ice cream parlor by Irving Robbins. Having opened a cafe, Irving Robbins took his relative Burton Baskin as a partner. Continuing the development of the business they started together, already in 1949 they owned six cafes. The number of such cafes continued to increase in subsequent years, and Robbins and Baskin came to the conclusion that they were not able to properly manage the established business. Then Baskin and Robbins began to open new cafes and sell them to those wishing to carry out entrepreneurial activities on the agreed terms and under the Baskin & Robbins trademark.

According to another point of view, franchising originated in medieval England. In the UK, ancient franchises for holding fairs and maintaining markets are still preserved.

There is also an ancient system of licensing the sale of beer to inns. Since the advent of franchising, it has different years used by many well-known companies. This is a manufacturing company sewing machines Singer Sewing Machine Company, firms General Motors, Coca-Cola, McDonald's.

Franchising received special development at the end of the last century. In the homeland of its formation in the United States, the share of entrepreneurial structures using franchising in their activities in the gross national product exceeded 43%. It is also significant for countries such as Italy, Germany, France

tion, UK.

Main types of franchising

The rights transferred in foreign markets by the franchisee to the franchisor can be very different. They may refer both to the use of the firm's name and to the overall concept of doing business. Therefore, the most commonly distinguished:

 franchising of goods and company name;

 franchising business package (format).

IN In the first case, a franchisor located in a foreign market is granted the right to sell goods and provide services in a certain geographical area using its trademarks. By selling goods or providing certain services, the franchisor receives a certain profit from increasing sales. Most often, this form of franchising is used in the sale and maintenance of cars, the sale soft drinks, fuels and lubricants. It is widely used by the Coca-Cola company, many chains of gas stations.

In the second variant of the implementation of franchising, the franchisor transfers to the franchisor located on the foreign market the so-called business package or format (franchise) developed by him and which is his property. The transferred package contains basically everything necessary for organizing a business by a newly created enterprise in a selected foreign market. For the most part, this package contains:

 company name;  trademarks;  patents;

 commercial and industrial secrets;  know-how;  business projects.

The package may grant the right to a newly created enterprise to act as a franchisor and create new sub-franchised enterprises in the agreed territory. At the same time, the franchisor usually assists in creating a management system for new enterprises, providing personnel, and in every possible way contributes to the establishment and development of business in newly developed markets. The degree of assistance provided by the franchisor can be very different.

IN in turn, for the provision of a business package, the franchisor, as a rule, pays an initial fee and makes constant payments, usually in the form of a certain percentage of turnover. He fully complies with the prescribed forms and methods of work, complies with existing technical requirements and standards for ensuring the quality of goods and services, and participates in training and retraining programs for personnel. He also takes part

V creation information base international marketing and is fully responsible for the results of its activities.

Business format franchising accounts for more than 70% of all

"

It differs from export in that it creates a partnership, which results in the creation of production facilities abroad.

Forms of joint activity

A) Licensing.

This is one of the easiest ways to involve a manufacturer in international marketing.

The licensor enters into an agreement with a licensee in a foreign market offering rights to use:

production process,

trademark,

Patent

or some other value in exchange for a fee or a license fee.

The licensor gets market entry with minimal risk.

The licensee does not have to start from scratch, because he immediately gains production experience, a well-known product or name.

The downside of licensing is that the firm has less control over the licensee than it does over its newly created business. In addition, if the licensee succeeds, the profits will go to him, and at the end of the contract, it turns out that the company has created a competitor for itself.

B) Contract manufacturing- conclusion of a contract with local manufacturers for the production of goods.

The contract gives the firm the opportunity to expand operations faster, with less risk, and with the prospect of partnering with or buying a local manufacturer.

The disadvantage of contract production is the firm's little control over production and the loss of profits associated with this production.

B) Contract Management- the company provides the foreign partner with "know-how" in the field of management, he provides the necessary capital. Thus, the firm does not export goods, but management services.

Contract management for some time deprives the company of the opportunity to develop its own enterprise.

D) joint ownership.

A joint ownership enterprise, or joint venture, is created to combine the efforts of foreign and local investors. The contributors jointly own and operate such business enterprise. A foreign investor can buy a share in a local enterprise, a local firm can buy a share in an already existing local enterprise of a foreign company, and both parties can jointly create a completely new enterprise.

A joint venture may be desirable for economic or political reasons. The firm may lack the financial, physical, or managerial resources to carry out the project alone.

Perhaps joint ownership is a condition by which the government stipulates admission to the market of its country.

Disadvantage of joint ownership: Partners may disagree on capital investment, marketing, and other operating issues.