The more formal the vertical marketing system, the less likely conflict will ensue. Each phase increases in the level of formalization & control. In essence, cooperation is naturally greater in a corporate system than in an independent supply chain: independent or conventional vms. Working for just ourselves: administered vms. No contract, but there is the need to work together, most powerful player to resolve conflict. Need to work together & if we work together we all benefit. Zara buys from to-su-to; (cid:373)ost po(cid:449)erful pla(cid:455)er i(cid:374) that relatio(cid:374)ship (cid:271)/(cid:272) (cid:271)ulk of zara"s ra(cid:449) materials come from to-su-to: contractual vms [franchise] Franchising: most common type of contractual vertical marketing system: franchising companies & their franchisees account for billion in canadian retail sales, e(cid:454). Ca(cid:374)ada"s fa(cid:448)ourite fra(cid:374)(cid:272)hises --- ti(cid:373) horto(cid:374)s, su(cid:271)(cid:449)a(cid:455), m(cid:272)do(cid:374)ald"s, shoppers, a&w: corporate vms. 3 things we use to describe a chain: ownership, control, conflict. : ensures merchandise flow efficiently from manufacturer to distribution centre to retail to customer.