Advantages And Disadvantages Of A Franchise

1. Franchisees gain numerous advantage when they purchase a franchise. First, while a franchisee may be opening a new store, it is part of an already established business and system. This means a franchisee has access to turnkey operations, allowing an increased speed to establishing and growing the business. Franchisees also get support for management and training activities, as well as financial assistance. Going hand in hand with this, a franchise already has an established brand name, quality of goods and service which have been standardized across the franchisor’s larger company, and national advertising programs from franchisors. Franchises also have large-volume, centralized buying power. A franchise has proven products, and

Alternative 3:  General reduction in the number of independent dealerships (100) without granting any formal exclusive franchise.

Advertising money is spent more efficiently (the franchiser teams up with local franchisees to advertise only in the local area).

Your initial franchise fee, which will range from several thousand dollars to several hundred thousand dollars, may be non-refundable. You may incur significant costs to rent, build, and equip an outlet and to buy initial inventory. You also may have to pay for operating licenses and insurance, and a “grand opening” fee to the franchisor to promote your new outlet.

Another ability and privilege that comes with a franchise is that the financial risk of any financial disaster is reduced and the consequences wouldn’t be as severe because the store is backed up by a large well-established company that acts as a safety net for Penny Thomas’s store, which is helpful and the store can feel more secure. On the other hand, marketing budget was set at $10,000, which can cover all the costs of the grand opening adequately, which is good for the starting company because budget is tight for any new project and efficiency is a key player in making the starting of this store follow more smoothly. Marketing capability wise, Penny Thomas enjoys Marble Slab’s already existing prominent name, so the store isn’t a new store that the target market must discover and learn about. Therefore, the franchisor made Thomas’s promotional task easier, and many existing Marble Slab customers will come to this location. As well, Marble Slab is already known for its high quality products that many customers around the 37 Ontario locations enjoy and crave. Thomas’s operational activities offer a great deal of mainly quality, freshly made ice-cream, with the option of letting the customer customize their purchases with a choice of toppings blended into their ice-cream flavour of choice, these

Schlosser recognizes that chains and franchises have become more and more prominent in today’s society: "Almost every facet of American life has now been franchised or chained," (Schlosser 13). The increasing number of franchises and chains helps the large corporations behind them to grow themselves and eventually, create more franchises. As consumers, we need to support our local, independent businesses to conserve regional differences and cultures. By obliterating independent businesses,

The first choice of business is the franchise. In a franchise, legal binding agreement is entered into between two firms, the franchisor (the product or service owner) and the franchisee (the firm to market the product or service in a particular location). The franchisee pays a certain sum of money for the right to market this product” (Rubin, 1978, p.224). The franchising is more prevalent in the restaurant industry (Hoffman & Preble, 2003). The two distinct features of this business type include; first, in order to notable service components should

Today’s generation is filled with people who want to own their own businesses and be their own boss, however, crossing an individual who intends on building their ideas from the ground up is rare because the process absorbs time and finances. For this reason, franchises are becoming more popular in the business world. In this system, an established business sells a portion of temporary ownership to a franchisee, in which the franchisee must incorporate the franchisor’s existing framework and practices in exchange for a managerial role. The franchisor Findings Popeyes Louisiana Kitchen Franchise Popeyes Louisiana Kitchen creates, runs, and franchises restaurants that specialize in the quick servicing of spicy chicken, buttery biscuits, red

| Franchisees may have to pay a monthly royalty even if the business is losing money.

• Accepted Franchisees can qualify for microfinance type financing for their 10% down payment to buy and run a local VIP Gift Cheque’s office. The Franchisor owner-finances the balance of the Franchise Fee at no interest and is based on actual business volume that is paid-off over the course of their first year of business with substantial profits left over, enabling more people to accomplish the American Dream and be producers and contributors in their communities.

In 2014, about 81% of McDonald’s restaurants were owned and operated by independent franchises. The company typically owns the land and building, or secures a long-term lease for the restaurant location, with the franchisee paying for equipment, signs, seating, and décor. The franchisee also pays a royalty based upon a percent of sales, along with rent. This allows the company to generate significant levels of cash flows. Franchised restaurants must adhere to standards and policies that will protect the

Franchisors are increasingly having to be more and more selective in the adoption of franchisees with factors such as economic climate and the potential difficulty with growth playing key factors in the decision making process. It is not simply an ability to grow which creates a successful Franchise and nor is it the desire of any franchisor to adopt every potential franchisee. Franchisors are becoming more and more scrutinising as the global economy declines. There is a general understanding within any franchised

McDonald’s has extremely strict rules when it comes to awarding franchises. First, it is very costly to open a new location or purchase an existing location, with the median startup cost being $300,000 (Kalnins & Lafontaine, 2004, p. 750). As well, the company does an extensive background check on a variety of issues including credit history, business management experience, and the acceptance of the contractual agreement that the company provides. Because of these strict rules and the large amount of capital needed to purchase a location, “rates for franchise applicants are 1% for McDonald's” (Norton, 1988, p. 204). This is an extremely low acceptance rate and is even lower than McDonald’s chief competitor, Burger King, who accepts 1.5% percent of applicants (Norton, 1988, p. 199). These low numbers are understandable in the context of the business and risk that is involved. Though the franchise purchaser must pay a large amount of money to gain the rights to the restaurant, they truly have nothing to lose besides money because they are simply running another company’s business model as well as using their trademarks and logos. McDonald’s on the other hand, has a great amount at stake because they place the well being of an entire restaurant into the caretaking of an individual who simply purchased the rights for the store. If the store does poorly or if there are issues with customer service, it reflects

By buying into a franchise you are gaining the benefit of the franchisors experience as well as the name and reputation that has already been built up by the franchisor. Therefore it is no wonder that ‘according to the U.S. Commerce Department, an estimated 95% of franchises succeed, whereas only 25-35% of independent businesses succeed.’ (http://money.howstuffworks.com) It is also not surprising that franchising makes up for about 3.2 percent of all businesses and 35 percent of all retail and service revenue in the United States, proving that it is big business. Franchising is very often a wise choice because consumers like

According to me a franchising is an arrangement in which one party the franchisor allow another party the franchisee the right to use its trademark, company’s name as well as certain business systems and processes, to produce and market a good or services according to certain condition.The franchisee pays one time franchisee, royalty and profits.It helps franchisor to expand his business. Assistances provided to franchisee by franchiser are Marketing, management, advertising, store design, standards specifications etc.