A. Initial Financial Start
Opening a franchise requires extensive financial planning through the evaluation of personal finances compared to vital start-up costs. No two franchises incur the same start-up costs, so having a substantial amount of capital available from the beginning is crucial. Franchise costs stem from the desire to open a franchise and the associated target industry. Franchises within the fast food segmentation require food inventory while franchises in the pet care segmentation require pet supply inventory. As a result, franchise entry fees range anywhere from $5,000 to over $5 million. Besides entry fees, franchise owners are required to pay administrative fees for legal and accounting services to review the franchise agreement and monitor the business’ finances respectively. Franchise costs certainly add up with the addition of both franchise fees and general, selling, and other operating expenses. A franchise cannot be successful if it does not have a location, employees, inventory, supplies, and equipment. Overall, a significant amount of capital is necessary to take on the financial obligations of a franchise (Goldberg 2016).
The franchising costs in 2016 are nothing compared to the costs incurred by franchise owners in the 40s. McDonalds, Kentucky Fried Chicken, and Howard Johnson Motor Lodges began offering franchising opportunities to interested parties at cheap franchise costs. Ben Franklin stores increased their popularity when an idealistic army
Boston Chicken implemented a franchising strategy that differed from most other franchising companies at the time. Boston Chicken focused its expansion through franchising the company through large regional developers rather than selling store franchises to a large number of small franchisees. In that, an established network of 22 regional franchises that targeted their operations in the 60 largest U.S. metropolitan markets and in order to do so, the franchisee would have been an independent experienced businessman with vast financial resources and would be responsible for opening 50 – 100 stored in the region. Boston Chicken focused on widespread
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
Small and mid-cap restaurants that were heavily franchised (less than 25% of stores owned by the
20,000 franchise inquiries every year and select 75 to 80, on average, to become new franchise
This industry receives no government assistance and the level of regulation is high. Franchising operations are regulated through Federal and State Governments. A federal regulation that has greatly impacted this industry is the recent increase in minimum wage from $5.15 to $7.25. This of course means that the employment costs for establishments will significantly rise. In addition to this many states have enacted a minimum wage that is even higher than the federal rate. Currently seventeen states, including New York, New Jersey, Oregon and Washington, have enacted this regulation (Basham 17). And lastly, another compensation issue that continues to arise is the issue of healthcare.
The franchiser can attain rapid growth for the chain by sign- ing up many franchisees in many different locations.
Many people dream of owning a business as opposed to working for another business. The benefits of owning a franchise is priceless if ran properly. This paper will show an estimate amount of variable costs and monthly sales in members and dollars for Snap Fitness. Also included are five examples of variable
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.
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
The reasons for these acquisitions are varied and include taking over poorly performing restaurants to protect the company’s brand name and to preserver the value of the local market. Reacquisitions also take place for strategic cash flow management purposes whereby investing current free cash flows in the reacquisition yields the expectation of replacing franchise royalties with the larger profits from the restaurants themselves. Company almost always pays some premium related to the contractual element of the franchise right that is capitalized as an intangible asset. However, it must be noted that the classification and nature of the intangible asset varies substantially.
It has its advantages and disadvantages to franchise the business. It is a careful decision to make for anyone to invest a lot of money into a franchise and everyone should be comparing pros and cons.
Within the United States, 12.7% of households had been food insecure at some point within 2015, meaning that not enough money was had to spend on food. ("United States Department of Agriculture Economic Research Service", par. 3) With this in mind, one of the largest problems when it comes to nutrition in the developed countries of the world is the availability of nutritious food to the lower classes because lower quality processed food is easier to obtain than nutritious food. This only seems to be a trend within developed countries so this argument will only focus on the developed countries such as the United States and France. Underdeveloped countries are left outside of these studies as they do not have widespread statistical values for any of their nutrition at any of the levels of
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
Not having to answer to a corporate boss is the dream of many and the flexibility that owning a business franchise creates provides this option. Success is not reached by simply creating a business, however. The level of success is measured by the size and efficiency of the business. Business growth is the driving force of the economy. The additional jobs and revenues created when a business expands allow the economy to grow at exponential rates. One of the fastest and most popular ways to increase the size of a business is to turn it into a franchise, which can then be purchased by individuals. Franchising provides opportunities that are beneficial to both the parent company and the purchaser. The company that owns the business can expand
When people think about the franchising concept, McDonald's usually comes up first as a prime example. Although McDonald's was not the first franchise business Isaac Singer, the inventor of the sewing machine gets credit for originating the franchise idea-the hamburger chain certainly exemplifies franchising success.