Non-Franchised Chain
Structure
Each store in a chain (or
multiple store) is called a branch. The original store, or the most important store, may double as the head office. Very large
chains may have a completely separate building as their head office.
The way chain stores are managed can vary from a centrally controlled operation at one extreme where virtually all decisions are made by the head office, to
the other extreme where each store can be run as a mini business and simply return a profit to the centre. It is very common for
chain store management arrangements to be somewhere in between these extremes, where smaller scale and local decisions are made by the branches and
decisions affecting the whole
chain are made by the head office.
Economies of Scale
As the chain grows in size and total sales volumes increase, the company managing the
chain is able to purchase goods for the stores at terms that are more favourable. They can also exert more influence over the attributes of the goods they buy and
sell such as the sourcing, the products' features, the packaging they come in and even the distribution and logistics involved in getting them to the stores.
Other benefits also arise, such as rationalising some management tasks across the whole chain and having uniform procedures and systems common to all of the stores. They can also rationalise
marketing across the chain. This not only is more efficient, it also allows
marketing messages to be more potent.
An example of a non-franchised chain is Wal-Mart.
Non Franchised Chain | Franchise Store Chain
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