Franchise vs. Business Opportunity

A franchise is a legal agreement between franchisers and franchisees that consents use of the franchise’s trademark and trade name or marketing plan

The business that I want to open would be a franchise of a McDonald’s restaurant. McDonald’s is a fast-food restaurant that serves a variety of products, but is mostly known for its

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

While doing some research I found that a franchise agreement is a binding legal contract that is signed between a franchisor and franchisee. A franchisor is the company owning the rights to grant franchises to franchisees, while a franchisee is a person or entity who is given the right to conduct business by a franchisor or licensor. The most important definition however is that of a franchise which is an authorization granted by the government or company to an individual or group allowing them to carry out certain commercial activities.

You pay a franchise fee and you get a format or system developed by the company (franchisor), the right to use the franchisor’s name for a limited time, and assistance. For example, the franchisor may provide you with help in finding a location for your outlet; initial training and an operating manual; and advice on management, marketing, or personnel. The franchisor may provide support through periodic newsletters, a toll-free telephone number, a website, or scheduled workshops or seminars.

One of the key similarities between these two types of ownership is liability. The franchise and public limited company have limited liability. This means protections of their shareholder from losing their personal finances if the company goes bankrupt. If the company fail they only lose their invested money in the business. If business wants to become a limited liability can it be complicated and expensive to set the business, decisions can take longer and it takes a lot of legal requirements.

Franchising is a business model that allows companies to rapidly expand their market share. According to Franchise.com (2015), there are three types of franchises: distributorships, trademark licensing, and business format franchises. When two organizations enter into a distributorship, the originating company provides the rights another company to sell their products. An example of a distributorship is when an auto manufacturing company grants rights to a dealership to sell their vehicles (Franchise.com, 2015). Trademark licensing is when one company allows another company to use their trademark (Franchise.com, 2015). The business format franchise authorizes franchisees to sell the parent company’s products and/or services as well as utilize their business model. This type of franchising is the most common and is the type needed to obtain to open a new Cold Stone Creamery.

If, during the first face-to-face meeting with one of our Franchise Sales Directors you are interested in continuing the process towards owning a Moe’s, he or she will provide you with our disclosure document, commonly referred to as the UFOC. This document is required by the Federal Trade Commission (FTC) and certain state laws and explains in detail a Moe’s franchise. The franchise agreement that you would sign is included in the UFOC for you to start reviewing. We will need the signature

Small businesses are essential to the fabric of the American economy. Specifically the franchise model offers an easy way for an entrepreneur to attain success in the increasingly difficult and murky economical landscape. The U.S. Census Bureau estimates that over 13% of the total American workforce is compromised of franchisee employees. That equates to roughly 7.9 million workers. And while many have found unbound success within the realms of franchising, there are risks specific to undertaking such an expenditure.

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.

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

Francize is the contract established between a franchisor and a franchisee. Franchisor is a contract that gives franchisee the right to use his or her trademark, trade name, or the right to lease or sell the product, and receives the appropriate commission accordingly. These contracts are a way to rapidly expand business with minimal capital. A legal right that government authorities have granted to companies and individuals to perform certain economic functions. For example, in a limited area, a company has the right to supply joint services. The franchise is emerging as one of the important business in this modern society and has spread quickly in many countries. The franchise is also spreading rapidly in the Vietnamese industrial society. Pizza2go is one of the examples of franchises in the Vietnam. Pizza2go has over 50 retail stores and has huge number of pizza menu with more than 2,000 options.

Franchisees are normally well established as part of the local community, either on a personal level or as a result of their past business activities. This can give them a very significant advantage in gaining new business for the franchise at a local level. They will generally live within the franchise territory, be known there and will be seen as having made a permanent commitment. The franchise system can provide a very cost-effective route for business development, but only provided that the original business is successful and that the franchisor is willing to invest sufficient an attractive franchise opportunity. The benefit of self-financing business units and a simplified management structure as

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

Advantages & Disadvantages of Franchising Franchising is ‘a continuing relationship in which the franchisor (the owner of a company) provides a licensed privilege to the franchisee (the buyer) to do business and offers assistance in organising, training, merchandising, marketing, and managing in return for a consideration. It is a form of business by which the franchisor of a product, service, or method obtains distribution through affiliated dealers (franchisees).’ (http://www.business.gov) A franchise is essentially a replica of an existing business. When you purchase a franchise, you buy the rights to use the parent company's name and to sell its product or service in exchange for an up-front franchise fee and ongoing royalties, which