1 / 23

CHAPTER 5

CHAPTER 5. Franchising. Learning Objectives. Explain what a franchise is and how it operates Compare the advantages and disadvantages of franchising Explain how to evaluate a potential franchise Explore franchising in the international marketplace.

reyesb
Download Presentation

CHAPTER 5

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CHAPTER 5 Franchising

  2. Learning Objectives • Explain what a franchise is and how it operates • Compare the advantages and disadvantages of franchising • Explain how to evaluate a potential franchise • Explore franchising in the international marketplace

  3. Explain what a franchise is and how it operates LO - 5.1

  4. About Franchising

  5. Franchising • Background • Existed since the early 1800s • Agents selling reapers and sewing machines • Considerable growth since the 1950s • Evolved past the use of exclusive agents and agency • Franchising today • Represented in almost every industry • Growing interest in international franchising • Supports more than 8.5 million jobs

  6. Types of franchising systems Product-distribution franchising Business-format franchising Franchising Systems

  7. Figure 5.1 - Not all Franchises Sell French Fries

  8. Product-distribution franchising Allows the franchisee (dealer) to buy products from the franchisor (supplier) or to license the use of its trade name Connects a single manufacturer with many dealers to make products available to consumers in a specific geographic region through exclusive dealers Franchising Systems

  9. Franchising Systems – Business-Format Franchising • A turnkey approach, where a franchisee purchases the franchisor’s product to sell, along with the franchisor’s entire method of conducting business • Operation procedures, marketing packages, physical building and equipment, and all business services • Used in quick-service restaurants, lodging, retail food, and table/full-service restaurants

  10. Compare the advantages and disadvantages of franchising LO - 5.2

  11. Table 5.1 - The Advantages and Disadvantages of Franchising

  12. Explain how to evaluate a potential franchise LO - 5.3

  13. Selecting a Franchise - Evaluate Your Needs

  14. Selecting a Franchise - Do Your Research • Sources of information • General business periodicals • Inc., Fortune Small Business, The Wall Street Journal, and Entrepreneur • Trade journals & magazines • Franchise, Franchising Opportunities World, and Quarterly Franchising World • Trade associations • International Franchise Association (IFA) • American Franchise Association (AFA) • American Association of Franchisees and Dealers (AAFD)

  15. Selecting a Franchise - Do Your Research • Online information - FranNet, ABI-INFORM, Business Source Premier, and Lexis-Nexis • Better Business Bureau • Institute of Management and Administration • Questions to ask • Speak with current and former franchisees to get information about a particular franchise • Evaluate opportunities after finding a franchise worth buying • Evaluate what the franchisor is willing to offer

  16. Selecting a Franchise – Analyze the Market

  17. Selecting a Franchise - Disclosure Statements

  18. Renewal, termination, or assignment of franchise agreement Training provided Public figure arrangements Site selection Information about franchisees Franchisor financial statements Personal participation of franchisees Earning capacity Use of intellectual property The franchisor Business experience of franchisor Litigation Bankruptcy Initial fee Other fees Estimate of total investment Purchase obligations Financial assistance available Product or service restrictions Exclusive territory Items in a Disclosure Statement

  19. Selecting a Franchise - Franchise Agreement

  20. Selecting a Franchise - Franchise Agreement • Importantfranchise agreement terms and conditions • Termination of the franchise agreement • Agreement must state how the franchisee could loose the franchise rights and the franchisee’s obligations if you choose to terminate the agreement • Terms and renewal of the agreement • A section that specifies how long the agreement would remain in effect • Exclusive territory • It includes the geographic size of the territory and exclusive rights that the franchisee would have

  21. Selecting a Franchise - Get Professional Advice

  22. Explore franchising in the international marketplace LO - 5.4

  23. International Franchising • A major activity for U.S. companies faced with: • Domestic competition • Saturated domestic markets • Involves rerouting products and services, operations, and supply chains to adapt with different cultures

More Related