Chapter 15. Franchising
·
What is Franchising and How Does It Work?
A.
What is Franchising
Franchising is a form of business organization in which a firm that
already has a successful product or service licenses its trademark and method
of doing business to other businesses in exchange for and initial franchise fee
and an ongoing royalty.
B.
How does franchising work?
It is a form of growth that allows a business to get its products or
services to market through the efforts of business partners or “franchisees”.
There are 3 franchise agreement ; Individual franchise agreement, area
franchise agreement, master franchise agreement.
·
Establishing a franchise system
A.
When to Franchise
Retail firms grow when two things happen: first, when the attractiveness
of a firm’s products or services become well known, the second is when a firm has
the financial capability to build the outlets needed to satisfy the demand for
its products or services.
B.
Steps to franchising a business
1)
Step 1. Develop a franchise business plan
2)
Step 2. Get professional advice
3)
Step 3. Conduct an intellectual property audit
4)
Step 4. Develop franchise documents
5)
Step 5. Prepare operating manuals
6)
Step 6. Plan an advertising strategy and a
franchisee training program
7)
Step 7. Put together a team for opening new
franchise units
8)
Step 8. Plan a strategy for soliciting prospective
franchisees
9)
Step 9. Help franchisees with site selection and
the grand opening of their franchise outlets.
C.
Selecting and Developing effective franchisees
The franchisor’s ability to select and develop effective franchisees
strongly influences the degree to which a franchise system is successful.
·
Advantages and Disadvantages of establishing a
franchise system
The advantages of setting up a franchise
system include rapid, low-cost market expansion, income from franchise fees and
royalties, franchisee motivation, cost savings and increased buying power.
The disadvantages of setting up a franchise
system include sharing profits with franchisees, loss of control, friction with
franchisees.
·
Buying a franchise
A.
Is franchising right for you?
Entrepreneurs should weigh the possibility of purchasing a franchise
against the alternatives of buying an existing business or launching their own
venture from scratch.
B.
The Cost of a Franchise
The initial cost of a business format franchise varies, depending on the
franchise fee, the capital needed to start the business, and the strength of
the franchisor.
C.
Finding a franchsie
There are thousands of franchise opportunities available to prospective
franchisees. The most critical step in the early stages of investigating
franchise opportunities is for the entrepreneur to determine the type of
franchise that is the best fit.
D.
Advantages and disadvantages of buying a
franchise
There are some advantages include an established marketing network, an
established trademark or business system, a proven product or service within an
established market.
There are some disadvantages of buying a franchise ; the cost of the
franchise pretty high, problems of termination or transfer, potential for
failure.
·
Steps in
purchasing a franchise
1.
Step 1. Visit several of the franchisor’s
outlets
2.
Step 2. Meet with a franchise attorney
3.
Step 3. Meet with the franchisor and check the
franchisor’s references
4.
Step 4. Review all franchise documents with the
attorney
5.
Step 5. Sign the franchise agreement
6.
Step 6. Attend training
7.
Step 7. Open the franchise business
·
Legal Aspects of the franchise relationship
The legal and regulatory environment surrounding franchising is based on
the premise that the public interest is served if prospective franchisees are
as informed as possible regarding the characteristics of particular franchisor.
·
More about franchising
A.
Franchise ethics
The majority of franchisors and franchisees are highly ethical
individuals who are interested only in making a fair return on their
investment. There are certain features that can help franchisors and
franchisees ; The get-rich-quick mentality, The false assumption that buying a
franchise is a guarantee of business success, conflicts of interest.
B.
International Franchising
International opportunities for franchising are becoming more prevalent
as the markets for certain franchised products in the United States have become
saturated.
C.
The Future of Franchising
The future of franchising appears bright. Franchising represents a large
and growing segment of the retail and service sectors of U.S. businesses and is
in some cases replacing more traditional
forms of business ownership.
Theodorus Tanusaputra/ 2201776804
Thank you for your post! Owning a franchise is popular among business people and entrepreneurs who want to have their own business. I think this material is aslo useful to read.
ReplyDeleteThe multi-location presence of Franchise Guru™ signifies a strong dedication to offering comprehensive franchise and business consulting services globally. With offices in Dubai, Mumbai, Delaware, and Beirut, they've strategically positioned themselves to assist entrepreneurs across different continents, ensuring accessibility and personalized support. The inclusion of contact details such as phone numbers and email addresses underscores their commitment to facilitating easy communication. This widespread network allows them to provide localized insights while offering a broad spectrum of expertise to cater to diverse business needs. Franchise Guru™'s global outreach reflects a commitment to empowering entrepreneurs worldwide on their business journey.
ReplyDelete