Franchising Is A Major Driver Of Business Development And Franchisor Brand Equity

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

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

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

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.

When buying into the company you sign a contract to firstly “buy” into the company, and then you have to pay royalties and a certain percentage of your earnings back to the head company. A positive of franchise agreements is that it allows companies to enter into the foreign market place with out having to put too much money into it. For example, 7- elevens in Australia are all franchises, the fist few franchises in Australia would have been set up as an experiment to see whether the Australian public would embrace the new chain store. The feedback would have been that Australia was pro 7-eleven and now you can walk through the city without seeing one on every corner. Another positive of selling your company as a franchise is that you can earn royalties. Different franchises have different royalty schemes, many expect you to pay a certain fee for the “name” each year and then pay them a percentage of the earnings. 7-eleven was taking 51 cents of every dollar made. This allows the head office to make money on the side while not having to invest more money into a situation where it could

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.

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

“A franchise is a business system in which private entrepreneurs purchase the rights to open and run a location of a larger company. The franchising company, or franchisor, signs a contractual agreement with the franchisee, explaining

An agreement or licence entered by two parties is known as a franchise. Franchising is a method that businesses use to market and distribute their products. The Franchisor gives rights to the Franchisee to market their brand or product by using their trademark, Franchisors also support Franchisees on an ongoing basis. There are two different types of franchising which are business format franchising and product and trade name franchising. Business Format franchising is when a franchisor offers the franchisee a package of deliverables and services which include the use of their logo and trademark and assistance with site location selection, hiring and training of staff, equipment, design and layout of the store etc. The franchisee has to pay a continuing fee in return for the packaging services that the franchisor is offering and sign a contract. Product and trade name franchising is when the franchisee doesn’t have to pay an ongoing fee

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

When an enthusiastic buyer signs' on the dotted line and looks forward to opening up his or her franchise there will have been a host of questions thrown around in discussions about the business. Some franchisors are tough on their potential franchisees and put them through their paces before accepting them into the fold, others are less stringent

We will do so by reviewing the relevant literature on the subject and by comparing what the theory says with the opinions of our panel of experts, as well as with the empirical information collected from public sources of information regarding the hotel industry. THE DECISION TO BE A FRANCHISEE: A THEORY OF FRANCHISE DEMAND AND ITS APPLICATION IN THE HOTEL INDUSTRY As described by Fulop and Forward (1997), a lot of theoretical and empirical research has been devoted to explain why firms franchise. However, few studies have aimed to explore the importance and the advantages of the franchise system from the perspective of the franchisee; that is, the entrepreneur choice of franchise vs. independent ownership – a theory of franchise demand. Given the relevance of franchising to the development of businesses, it is interesting to learn why so little attention has been paid to the decision of would-be entrepreneurs to eschew the independent operation and become franchisees. The issue of franchisee motives, though widely recognized and frequently discussed by franchisors, still remains largely unexplored in empirical research terms. From a managerial point of view, a better understanding of the franchisee‟s motivation will provide some interesting insights to franchisors as to how to position their offer in the franchise market. Franchising is not only an organizational system, it is also a market

Opening a franchise brings a brand name and materials to a business to produce instant recognition and bring in brand loyal consumers. A franchise creates a business relationship with a franchisor to bring a brand name, trade dress, and trademark to a franchisee (Kubasek et al., 2015, p. 431). In turn for the franchise material and name, the franchisee pays a percentage of sales to the franchisor (Kubasek et al., 2015, p. 431). As reported in 2011, franchising was so popular that it was the genesis of one of every 12 retail businesses in the United States (Welsh, Desplaces, & Davis, 2011, p. 4). A weakness of owning a franchise was reported by Perrigot, Hussain, and Windsperger (2015) where “franchisees have to strictly follow operating manuals and almost all of the strategic decisions are made at the franchisor level” (p. 696). Although it does have a curtailed degree of freedom, a franchise brings greater stability with a proven business style and support system.

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.

This paper is concerned with evaluating the structure, history, cultural aspects, leading businesses, and the future of international franchising. Franchising has become an increasingly popular market-entry mode, and the use of franchise systems for expansion into international markets is expected to continue and perhaps intensify. (Arthur Anderson, 1996) These business franchises appear as hotel chains, fast food restaurants, and many others.