Benefits Of Franchisor And Franchise

A new business claims a great deal of time, effort and sacrifice. New individuals are motivated by their ownership of the business and the capital they have invested. So by franchising, you are going to get better talent that will work harder to form the business.

Introduction Opening up a business such as a franchise can carry many risks, both financially and personally but can also be very rewarding and challenging. Some people make a decent living, some end up rich, then again, plenty of people fail. (MSNMoney, 2014) There are many advantages of owning a franchise. Some advantages are that you have association with a well-established brand, reputation and product or service, access to established standard procedures, operating manuals and stock control systems.

Franchising is defined as “a commercial agreement between a party that owns a trade name or trademark (the franchisor) and party that sells or distributes goods or services using that trade name or trademark (the franchisee) (Kubasek et al., 2015, p. 431). There are key advantages for choosing a franchise when starting a new business. First, there is many times instant brand awareness that is identifiable by potential customers, which you as a new owner do not have to concentrate on building. Secondly, on-going marketing of your business is backed by the power of the established brand, and could be as simple as contributing a fee to a advertising fund that is driven by the franchisor. Thirdly, the Return on Investment (ROI) will most likely be faster as the customers are “ready-made” and eager to buy your product or service. Fourthly, the franchise model provides a built-in support model, both from the franchisor and from other franchisees throughout the region and nation. Lastly, the franchise will provide consistent and extensive training in every aspect of the business (Goldberg, 2015).

The Advantages and Disadvantages of Franchising in France 1 Running head: International Trade: Licensing and Franchising The Advantages and Disadvantages of Franchising in France Presented by: Deon E. Boswell Of Team McWorld University of Maryland University College AMBA606 November 4, 2005 The Advantages and Disadvantages of Franchising in France 2 Executive Summary The tremendous growth in franchising over the last decade can be traced directly to the explosion of growth in international trade and globalization. As organizations, attempt to enter new markets they are finding that direct investment via subsidiary creation is an expensive proposition and that their capital expenditures could be used for other opportunities

I. What steps should you, the prospective U.S.-based franchisee take when establishing outlets in foreign countries?

Second alternative in order to reach new markets is franchising. Franchising is one of the most widespread forms of cooperation between companies all around the world. A franchisor is the founder of the whole system and represents a core for the whole network of franchisees. The parent company develops and manages the conditions at which the franchisees function and actually sells its business objective. In the chain of franchisees, each one is an independent business unit but its operation is partially controlled and limited by the parent company’s marketing conception. Therefore, franchising provide both advantages and disadvantages for the franchisor as well as for a franchisee.

The word "franchising" comes from the old French term defining the right for freedom of conducting any activity, for example, carrying out fairs, the organization of markets, operation of ferries and crossings, the right for hunting, a construction of roads or production of ale. In the Middle Ages kings had such privileges providing franchises on commercial activity of any type possessed.

The advantage of franchising is the company that allowed copying the entire company’s concept such as it name, the product it produces, or the way it does it business. A lot of companies have chosen franchising to operate their company because it’s like the faster way to bring your company to others countries. For example, the most common and prevalent, as everybody knows the American restaurant, Pizza Hut. This is because the franchisees usually received the financial support from the franchisors, which means franchisees can enter to others companies without considering the financial issues. However, it brings disadvantages too, which is the company will face a loss of control. For example, Pizza Hut which operating by franchise will face the loss of control such as lack of innovation, inflexible working hours and argument with the franchisors may occur. For example, franchisees are not allowed to produce others products themselves, they can just sell the product from the franchisors which cause lack of innovation. When doing the decision making, that usually may cause the conflict between franchisor and franchisee because franchisees are not allow to give any opinion even thought they disagree about the

An entrepreneur is someone who sets up their own business and take on financial risks in hope of making profit. There are many skills that an entrepreneur would have, some of these skills include focus, resilience, self-reliance, ability to learn, ability to sell and the ability to take on risks (Forbes, 2013, online). A franchise is an arrangement between the franchisor and franchisee where the franchisor will give the rights to the franchisee to use its trademark/trade-name and some business systems to produce and market a good or service. There are two types of franchises, one is product distribution is where the trademark and logo is provided although the business systems are not provided. Another type is a business format franchise is where the product and trademark is used alongside the franchisee conducting the business itself such as the marketing plan and operations manual (An Introduction to Franchising, 2001, pg.2, eBook). This essay will be discussing the advantages and disadvantages of an entrepreneur buying a business format franchise. Some points that will be discussed in this essay are the costs, the level of support and certain restrictions when buying a franchise.

For franchisors, the primary benefit is the ability to use other people’s money to expand the brand more rapidly than they could either on their own or through investors or lenders. The initial franchise fee and ongoing royalties they collect allow franchisors to build their brand without sacrificing control to outsiders or the pressure of repaying lenders. “Follow the system is a mantra in franchising and critical to a franchisee’s success. Franchisees buy into the franchisor’s operating system believing that if they follow it to the letter they will succeed and be profitable. Franchisees also must agree to keep the franchisor’s proprietary system and trade secrets confidential, as well as sign some type of noncompeting agreement. Some need total independence to succeed or fail on their own, while others prefer the tradeoffs found in working for a larger organization. For the franchise partnership to succeed, the buyer must be comfortable not only with the franchise model, but also with the culture, values, and goals of the franchisor and vice versa. There are seven types of the key benefits of partnering with a direct marketing franchise

The franchisor will be able to offer assistance in sourcing the products and services that franchisees will require to operate their business, and in some cases will even act as the franchisees main supplier.

The franchise industry is an industry that is highly visible to the public eye; mainly because of such names as McDonald’s, Kentucky Fried Chicken, Popeye’s, Burger King, Starbucks and the like. They all fulfill a service which the general public supposedly needs. From a simple fried chicken leg, to a strong cup of specialized coffee, or even a set of bed linens, they all serve a general purpose. Each one supplies the public with goods and services at a cheaper price.

Franchising is an important and relevant topic for a business plan, especially for a fast food restaurant. Shane & Hoy (1998) claim “Business plans are far more common among franchisors than among independent business owners”. The purpose of this literature review is to critically analyze literature regarding franchising from the perspective of the franchisor. To do this the definition of a franchise should be discussed along with the franchise business model. The management of a franchise should also be considered, exposing the perceived benefits and problems that arise for a nascent franchise business.

It is common for people to think of franchising as an industry, and although it can be considered to be an industry, it can also be seen as a “business model”. Dr. Vinay Garg, a professor at Missouri State University took time researching franchising benefits and strategies. Garg has studied and surveyed over 1000 franchise businesses. He found that franchising could be a great opportunity for any individual to become an entrepreneur by starting his or her own business. Since franchisors such as McDonalds or Dunkin Donuts is well known to the public, the franchisee will find it less difficult to bring in customers (Mostyn).

Basically the ideas is Franchisor gives licensed privilege to do business continuously, plus support on training, management and merchandising in order to gain a profit in return from the franchisee (International Franchise Association)