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WHY FRANCHISE

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					His & My objectives




    Objectives

1                     5/30/2013
Delivery / Responsibility




      Guest Satisfaction is our main goal.

                                             2
                   Looking Ahead
After studying this chapter, you should be able to:
Describe the significance of franchising.
Identify the major advantages and limitations of franchising
Discuss the process for evaluating a franchise opportunity.
Evaluate franchising from the franchisor’s perspective.
Describe the critical franchisor/franchisee relationship.
Understand issues related to franchise regulation and know the
warning signs of franchise fraud
           Franchising Terms
Franchising
A marketing system revolving around a two-party
legal agreement, whereby the franchisee conducts
business according to the terms specified by the
franchisor
Franchise contract
The legal agreement between franchisor and
franchisee
Franchise
The privileges conveyed in the franchise contract
           Types of Franchises
Product and Trade Name Franchise
Grants the right to use a widely recognized product or
name (i.e. gas stations)
Business-Format Franchise
Provides an entire marketing system and ongoing
guidance from the franchisor (i.e. fast-food)
Piggyback Franchising
The operation of a retail franchise within the physical
facilities of a host store (i.e. complementary food
service in a fast food store)
           Types of Franchises
Master Licensee
An independent firm or individual acting as a sales
agent with the responsibility for finding new
franchises within a specified territory
Multiple-Unit Ownership
Holding by a single franchisee of more than one
franchise from the same company
Area Developers
Individuals or firms that obtain the legal right to open
several franchised outlets in a given area
The Advantages of Franchising
Proven marketing concept and customer base
The use of an established, nation-wide brand.
Training
May help alleviate managerial weaknesses.
Financial assistance
Start-up business costs are normally high and thus by teaming up
with a franchise organization, the individual can increase her/his
chance of receiving financial help.
Operating assistance
The franchisor provides a range of operating services including site
selection, bulk purchasing of equipment, and inventory.
   Limitations of Franchising:
Restriction of Business Operations
 Franchise costs
 Restrictions
 Sales territory
 Site approval required
 Outlet appearance
 Goods/services to be sold
 Resale of franchise
 Advertising and hours of operation
 Loss of independence
        Evaluating Franchise
           Opportunities
Locating a Franchise Opportunity
Investigating the Potential Franchise
Information sources
Independent, third-party sources
Franchisors themselves
Existing and previous franchisees
        Explanation of Costs

Franchise fee            Insurance, Licenses and
First and Last Month’s   Permits
Rent                     Training
Leasehold Improvements   Initial Inventory
Equipment                Working Capital
Furniture and Fixtures   Royalty
Signage
          Brief Outline
What is Franchising?
History of Franchising
Types of Franchising
Advantages Vs Disadvantages
Franchisor Vs Franchisee Relationship
Why Franchise?
Ways to Promote
Conclusion
  What is
Franchising?
Singer Sewing Machine

McDonald’s

Automobile Industry
     TYPES OF FRANCHISE

Main types of Franchise:

Product Distribution Franchise
Business Format Franchise
Management Franchise
PRODUCT DISTRIBUTION
    FRANCHISES
BUSINESS FORMAT
  FRANCHISING
MANAGEMENT FRANCHISE
 ADVANTAGES

FRANCHISOR                   FRANCHISEE


Expansion
Legal Consideration
Operational Considerations
Competition
    DISADVANTAGES

FRANCHISOR                           FRANCHISEE
Limited Pool Of Viable Franchisees      Price
Control                                 Control
Management Sharing                      Conflict
Business Secrets Sharing
Franchisor – Franchisee
Relationship

Regulated by contract which usually covers:
Initial Fee
Royalty Fee / Management Fee
Capital Required from Franchisee
Territory / Area of Operation
Duration of License & Renewal
Termination
WHY FRANCHISE?

Franchises offer important pre - opening
support:
Site Selection
Design & Construction
Financing (in some cases)
Training
Grand - Opening Program
                                           Continue
                                      WHY FRANCHISE?


Franchises offer ongoing support
Training
National & Regional Advertising
Operating Procedures & Operational Assistance
Supervision & Management Support
Increased Spending Power, Access to Bulk
Purchasing & Economies of Scale

				
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posted:5/27/2013
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