In this exhibition, holding the International Conference of Iranian Franchises with the presence of franchise industry experts provided the conditions for reviewing the most important requirements of the industry in the future. Accordingly, in a specialized conference held with the presence of the CEO of the Franchising Association, the chairman and members of the board of directors of this association, the CEO of the Iranian Brand Academy, the Director General of the Ministry of Health and experts in this field, the opportunities facing the industry in the Iranian economy were discussed.
5 Provincial exhibitions on the agenda
At the conference, Mohammad Ali Mollaie, Managing Director of The Iranian Franchise Association, expressed his satisfaction with the 5th International Franchise Industry Exhibition in connection with the development of the industry and said, "We have entered into talks with the managers of the Ministry of Health to provide the possibility of expanding the industry in the provinces and cities of the country, and those interested in this industry will be developed in accordance with more appropriate standards, regardless of quantity and with an emphasis on quality improvement." It is also well visible at the 5th event of the industry. According to him, in five provinces, we have tracked industry-related events and therefore the exhibition will be held in March in Mashhad and July next year in Isfahan.
On the other hand, we have entered into negotiations with decision-making organizations to unravel and facilitate the industry's capacities, and we have received initial approvals from different sectors that will soon be converted into regulations and incentives so that we can see the development of this industry in various sectors, including exports. He called on industry activists to put the industry in its right place by addressing issues such as education to reach global markets and align with international standards.
Standardization in franchise industry
Majid Karbaschi, Chairman of the Board of Directors of The Iranian Franchise Association, pointed to the significant growth of the brands present at the exhibition, said: In the past, deviation of the industry's criteria compared to international standards was acceptable, but today we should pursue the industry more scientifically and professionally and define the legal, branding and marketing issues of the industry based on the standards of the world and the association should try to interact with the sectors. Different governments and the judiciary, while revising within their structure. According to him, franchises as part of the economic body require government support in order to get their share in the economy, so we are interacting with four ministries. He added: "Unfortunately, we do not have statistics on the share of franchises in microeconomics, but in the future we hope to be able to measure our share in employment, production, growth and show that for the people-centered, non-oil and non-franchise economy, the franchise industry should be taken into consideration.
Legal gaps
Mirshebiz Shafe, a lawyer at the conference, pointed out that in Iran, the franchise industry is more known in the field of food, but the industry in the world includes 120 fields of activity. Expressing the limitations of financial and employment capabilities to increase the branches of companies, he said: "The industry is facing risks in the field of contracts, which can cause damage to the franchise industry, contracts and its actors, for which the U.S. government has passed laws regarding the compliance with minimums in order to set up this business, and for this purpose, the transparency document of businesses in this country was introduced and On the basis of that, the turnover of the past 5 years and the number of active scorers, scorers who have been involved in a dispute or termination of the contract should be published. This set of measures has saved franchises in this country from discredit and ensured a framework for ensuring minimal inspections and intelligence surveillance.
According to Shafa, another vacuum is the discussion of the long-term actions of the franchise owner. Basic education, long-term training, etc. Must be presented by the franchise owner. For this purpose, two tools must be considered: the role of the legislator to pass minimum laws, which the government has been preparing for years, in modern commercial contracts with 13 contracts ranging from distribution to representation and franchise of these laws, and now it is in parliament and it is not finalized that if finalized, an important step will be taken for the development of the industry. According to him, the second point is to build the necessary infrastructure until the law is ready and for this purpose the association can play a suitable regulatory role for the industry. It is necessary to set the appropriate contract between the franchising and receiver parts to reduce differences.
In another part of his discussions on arbitration issues in contracts, Dr. Shafe said: "Courts face fundamental weaknesses in the face of disputes in the franchising sphere due to unfamiliarity between judges and lawyers. Therefore, in contracts it is necessary to replace arbitration, because the value of the arbitration ruling is equal to that of the justice, and the path is also shorter and cheaper, and it is carried out by experts, and this is a service made by the Franchise Association. Therefore, the parties must add a provision to the contracts in order to benefit from this capacity to resolve potential problems.
Intangible assets more important than tangible assets
Dr. Shahriar Shafiee, founder of The Iranian Brand Academy, pointed out that in the franchise industry we are talking about intangible assets, said: "Intangible assets are different from tangible assets, and if it cannot be used properly, the whole capital will be lost and therefore managing this asset is important. According to him, a survey of the top 500 companies in the world shows that the share of intangible assets of these companies accounts for more than 85 percent of their total assets. Although our country is late to enter the global franchise game, it must undoubtedly put attention to intangible assets at the forehead of the industry.
He pointed out that the beginning of the intangible asset story also begins from the brand headline continued: We started the brand issue in Iran more than two decades ago, while at the time they considered the brand only a graphical form of logo, but today an understanding of the brand is missing. Franchises also receive an intangible asset from a franchiser.
According to Shafiee, 12 intangible assets are provided to franchisees in the process, the first being the market asset. The second is the product behind which is a R&D group. The third is technology and knowledge and research and development. The fourth is infrastructure. The fifth is the future microprocessor that must be designed and provided to franchisee by the organization. The sixth is personnel training that happens either through the organization or through the association. The seventh is the issue of advertising sponsored by organizations. The eighth is the legal backing that is of great importance. The ninth support is franchise by franchisee, which is general and organizational learning and storing experiences and providing experiences for franchisees. The tenth issue is culture, especially in the field of providing services, requiring the transfer of culture from within the franchise organization to the recipient's franchise. The eleventh issue of franchiseeers becomes members of a larger society. The bottom line is that custom is above the law, so what is being done today is defining the future history of the franchise industry.
Three questions in the field of industry
Dr. Mohammadnejad, deputy head of The National Distribution Company of Iran, said at the conference: "There are three axes that we need to examine, first, why should we go to franchises? Fierce competition from chain stores and the pressure of these stores are the reason for this. As soon as a chain store is launched, adjacent stores are collected as the supplier company collects its distribution fleet and therefore the provision of services is reduced from the supplier side. The second is that the bargaining power to buy goods and deliver goods at a lower price in chain stores far exceeds that of local supermarkets.
The third issue is the cumbersome laws of a country that exists in both categories, but chain stores have teams to offer executive solutions, but supermarkets do not have that possibility. Having distribution hubs for chain stores, more suitable store liquidity, day-to-day price growth, consumers' willingness to buy from chain stores are all factors that have led these stores to collect supermarkets. According to statistics, the maximum consumption basket of chain stores in Iran is 10 percent, while for the world it is above 50 percent, and if one day this share for chain stores reaches the global figure, the issues mentioned will become much more severe.
The second question posed by Mohammadnejad was, what are the benefits of franchises? According to him, reducing the need for multiple visitors, not having multiple settlements with different companies, not facing multiple suppliers, having more appropriate control systems, no need for initial capital to supply goods are all franchise benefits. He finally addressed the issue of franchisee duties against the franchisee and stressed the importance of updating and formulating strong contracts between the two sides.
Training and supervision: two fixed legs of franchise development
Amir Hossein Asadi, Director General of Business at the Ministry of Health, pointed to the necessity of training in the franchise industry and emphasized on the issue of monitoring using intelligent and technological systems in the industry and said, "Unfortunately, unscientific activities cause us to face challenges instead of progress. At the same time, he noted the need for business consultants in the industry and said that although nearly 35 percent of the cost of starting a business is reduced through franchises, if not enough attention is taken, the pests of this issue will hurt business owners tens of times.
He pointed out that companies need to analyze them from a psychological point of view before they give their brand to people in order to get enough recognition, he added: "The trademark is valuable, but if it is available to others without evaluation, it will fall in value. Another issue is the issue of supervision, which is less considered in Iran, while in the franchise industry continuous monitoring of the performance of the person who received the trademark of franchises is of great importance. In another part of his talk, Asadi stated that we are defining a license in the ministry as franchise service companies and said that in a month, this issue will be finalized and in cooperation with the Franchise Association, and accordingly, the activities of the actors of this industry will be accelerated and facilitated.
He also promised to launch a system to provide franchise information that could increase transparency in the field. We will also prepare a regulation on brand discussion for the Cabinet of Ministers, which has two clauses for franchises, but we will develop the regulations in the franchise discussion. We also have a center as a brand valuation center on the agenda that will revolutionize this discussion. The last issue is also in the field of business development to help us move towards the expansion of franchise culture in collaboration with the association.
Increase productivity and scale generation by franchise
Hooshyar Faghihi, secretary general of the Chamber of Commerce of Iran, pointed out the economic challenges in the country and said, "We have not been able to use the tools in the economy, one of which is franchises. According to him, currently we have 2.3 million registered trade units in the country and 7,260 unions and 393 chambers of guilds are active, which because of their wisdom cannot create proper productivity and value added, and one of the tools that can solve this problem is the franchise tool.
He added: "One of the main problems in the economic field of the country is the production of scale, which inability to do so makes us have low competitiveness, and as a result, in the field of non-oil exports, there has not been much success in the production of value added and its exports. The largest share of franchise tools is now in chain stores and we desperately need to use this tool in service areas. According to Faghihi, when we used chain store tools in the mid-1990s, a large syllable of the traditional store sector was created, but if we use franchise tools to preserve traditional businesses, it will lead to the development of traditional stores alongside chain stores, which Yaran Dorrian is a successful example of this.
He continued: "In order to implement this tool more appropriately, we ask the association not to enter the implementation and explain the theoretical areas and the implementation will be left to other actors. We are in a country that has an uncompromising culture and we are facing a secondary education system that does not foster a culture of participation and does not train human resources with the world's up-to-date components that these issues should be addressed by the government and provide the necessary infrastructure to ultimately lead to economic development and in this way, the franchise tool can be used well.
Arman Khaleghi, member of the board of directors of Iran's House of Industry, Mine and Trade at the conference, said that in order to put the first clay and move right in the direction of business and profitability in the industry, we need a roadmap that we have cooperation with the association for this purpose so that we can share and play the role of each actor in different areas of law and regulation, government, guilds, brands, etc. Naturally, stakeholders, academic experts, the private sector should all determine their role in this direction and we expect that by next year the roadmap for the industry will be drawn.