Consignment and Franchise selling

Consignment selling refers to the practice of placing goods in the hands of middlemen, with title and control remaining in the hands of the seller. Distributors who sell on consignment are in effect not wholesalers or retailers, but merely agents. They receive a commission or a share of the sales price. The manufacturer who owns the goods specifies the manner, time and price of sale.
The advantages of consignment selling to the distributor are obvious. He runs no risk of buying and being "stuck" with goods. He has no money invested in stocks. As far as the manufacturer is concerned, he fixes the price and controls the selling techniques. Consignment selling makes cut-price competition impossible.
This method of distribution is not a common one in recent years. It was particularly advantageous to a distributor who lacked the capital with which to buy and sell for his own account. But there was always some doubt about the legality of such arrangements which permitted the manufacturer to enter into agreements with the distributor as to price, selling terms, etc. This has been looked upon in some circles as a violation of antitrust laws. Consignment selling, except for individual and restricted situations, may be said to be on the way out. More and more responsible merchants are in a position to purchase merchandise and finance their profitable distribution.
Although not a new method, franchise selling has in recent years received considerable impetus. The number of independent business men doing franchise selling is estimated to be between 50,000 and 100,000. In essence, this is a system of merchandising whereby a manufacturer or other purveyor of services sets up, under a single brand, a chain of small business men who buy supplies from the franchiser, but otherwise run their own business as they see fit. In some instances, they have to pay a franchise fee, buy equipment, or pay a royalty. The franchiser keeps title to the basic product or service rights.
Franchise merchandising gives the small man a chance to buy on credit. With a minimum of capital investment, he sells specialties or special services, such as ready-cooked meals, specialty foods, carpet cleaning and automobile parts. The parent company does the promoting and supplies management know-how. Bulk buying gives the franchise holder buying advantages in prices and terms.