HRIM381 Management of Food and Beverage Operations

1. HRIM381 Management of Food and Beverage Operations Franchising Small-time investor’s chance to strike it rich Franchising

2. HRIM381 Management of Food and Beverage Operations Franchising • Allows for a company to expand rapidly • Uses other peoples money (franchisee) • Examples: • Bojangle’s • Hooters • Brinker International Franchising

3. HRIM381 Management of Food and Beverage Operations Franchisor • Owner of the trademark, process, operating procedures, blueprints • Maintains standards of franchisee • Dictates provisions of contract • Responsible use of name • Net worth of primary stockholders • Franchise's market area • Provide incentives for growth • Concurrently, Franchisor can operate their own units Franchising

4. HRIM381 Management of Food and Beverage Operations Benefits for the Franchisor • Increased market share • Increased stream of revenue • Up-front fees • Maintain control of key elements of operation • Operate wholly-own operations in key markets Franchising

5. HRIM381 Management of Food and Beverage Operations Drawbacks for Franchisor • Careful consideration of the franchisee selection • Difficulty in maintaining standards • As franchisee base increases there is a loss of decision making control • Increased liability • Mandatory disclosure of business principals Franchising

6. HRIM381 Management of Food and Beverage Operations Franchisee • Contracts with Franchisor • Agrees with the provisions of contract • Accepts conditions and blueprints of the franchiser organization • Opportunity to build a large portfolio of franchised locations Franchising

7. HRIM381 Management of Food and Beverage Operations Benefits for Franchisee • Set of plans and specifications for building – shortened start-up • Branded Trademarks and Trade Dress • Proven methods of operation • National advertising • Participation in volume purchasing discounts • Access to capital Franchising

8. HRIM381 Management of Food and Beverage Operations Disadvantage for the Franchisee • Lack of operational power; must conform • Large fees • Must meet standards as set by franchisor • Often franchise is non-transferable • No control over brand name ownership Franchising

9. HRIM381 Management of Food and Beverage Operations Franchise Examples • Franchisors: Yum Brands • Subway • Quiznos’ Subs • Franchisee’s: • Applecore Enterprises Franchising