The comment for the management history class of 11/5

Yesterday we mentioned about franchise.
Inthe automobile industory, franchised stores are called
Dealers. Dealers sell new cars and buy used cars and sell used car.
Market is limited, or people who can buy new cars are limited.
Therefore, for nourishing our economy, rich men buy new car, one after another.
In the process, dealers should buy there used cars and sell them to other relative poor person.
Both of selling new cars, and used cars, dealers can get profit, but generally, used car sale is
better than new car sales. Therefore, by the principle of the economics, dealers want to sell
used cars rather than new cars.

But franchise could restrict them to do such betraying.
If the makers admit the dealer is not adequate for franchise,
they can cancell its franchise. After cancellation, the dealer is not GM,
but just a store, which sell and buy used cars.
As a result, the profit of the store would be harmed heavily. Because, franchise sometime
represents "Reliance" of the store.
Maker gives dealer "Reliance" dearer gives maker "Service" to sell new cars.
Like this the conflict between two is harmonized.

Good example is Covenience stores.
large proportion of the 7-11 are franchises.
Thier owners are not employees of 7-11.
They pay "Royalty" to use the sigh of 7-11.
7-11 HQ provides them 7-11 quality and reliance.
If the service is not good, HQ can cancell its franchise,
because it would suffer 7-11 quality.