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Franchises Fill In the Gaps

A random sampling of some this week's franchise announcements shows that, while global agreements are becoming more popular, geographic gaps still exist.

  • {complink 12816|Mouser Electronics Inc.} announced its distribution agreement with Phoenix Contact now includes Europe, making Mouser one of the few European catalogue distributors for Phoenix Contact. The new European agreement with Phoenix Contact coincides with Mouser’s international expansion strategy by adding another high-profile manufacturer to Mouser’s European lineup.
  • Avnet Memec has confirmed a new pan-European distribution agreement with {complink 12722|Renesas Electronics Corp.}, following the merger between Renesas Technology Corp. and NEC Electronics. The agreement makes Avnet Memec a key distribution partner for the entire portfolio of Renesas microcontrollers and system-on-chip, analog, and power products throughout the Europe, Middle East, and Africa (EMEA) region.
  • Austriamicrosystems, a leading global designer and manufacturer of high-performance analog ICs, has entered into an agreement in which {complink 2164|Future Electronics} will now distribute austriamicrosystems products to customers worldwide. This expands on the previous agreement that covered Europe and the Americas.
  • Suppliers franchise distributors on a region-by-region basis to avoid over-distribution of their products and minimize conflict within their sales channels. The problem with this practice is that a distributor that serves a global customer may be authorized to sell a product in North America but not in China. Exceptions are often granted, but there's always a lot of paperwork involved.

    Suppliers increasingly are filling in those gaps by expanding existing distribution agreements into multiple regions. This practice helps both suppliers and distributors better serve customers and moves the industry another step toward true globalization.

    6 comments on “Franchises Fill In the Gaps

    1. t.alex
      December 8, 2010

      It is really good move to go through distributors to reach to faraway regions/countries. Colocation with the customers is one of the most important aspects of doing business globally.

    2. SP
      December 9, 2010

      The suppliers just want to reach the customers if not directly let it be franchises. If the consumer gets what he needs and quicky its a win win situation for both the parties.

    3. Barbara Jorgensen
      December 9, 2010

      There's no question that global franchises benefit the customer, the supplier and the distributor. Regional franchises served their purpose when there were a dozen distributors in one area competing for a supplier's attention and the same OEM customers. Suppliers had to be very careful to not be over-distributed and dilute their market share by being sold though too many channels.

      At the same time, suppliers have developed long-term relationships with regional distributors in developing or geographically fragmented markets. The key is to find the right combination of global/local services the customer needs.

       

    4. Mydesign
      December 10, 2010

         Making Franchises are the best way for companies, to market their products and to expand their presence with a minimal effort.  It gave some good benefits for the company also, primarily it’s the duty of the franchise to market the products. There is No direct risk involved for the companies, because the franchise peoples will look after the entire thing. In most cases the companies will allocate franchise only to well established banners with proven track record. Companies have to only direct or guide them as per their policy, else they can also spoil the name of parent companies too.

    5. itguyphil
      December 11, 2010

      The channel-only business model can be very successful if the demand is properly calculated. It decreases marketing/PR costs and allows more exposure especially if the product is worth it. This same idea translates to the franchise model if done right. Look at McDonald's for example.

    6. elctrnx_lyf
      December 12, 2010

      Choosing different distributors over the separate regions also provides huge benefits to the suppliers since they actually have a choice. So rather than just having single global distributor the suppliers can choose their distributors based on their customers in particular region. One more added advantage to the suppliers is that they will be present in all the distributor websites. So if an engineer tries to find a particular component then the supplier can be visible in all the major distributors.

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