Franchising

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 franchise marketing is introduced to the business market from quite a long time. It is to be noted that while expanding the business entity over the global competitive market, the local companies sell

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.

Franchising acquired its popularity by establishing a common method of service which gave customers the comfort that they look for when they look for a meal.When the customers go out

Franchising is simply a method for expanding a business and distributing goods and distributing goods and services through a licensing relationship. In franchising, franchisors not only specify the products and services that will be offered by the franchisees, but also provide them with an operating system, brand and support. (Franchise.org, 2016)

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

& Wang, Y. (2012) narrated that franchising is quite similar with licensing but comprises long-term commitments whereas licensing comprises short-term commitments. Franchising is a right that a parent company gives to other business by allowing to do specific company activities such as selling product or service with the name of parent company, for example McDonalds and Starbucks Coffee. A company selling franchise receives royalty payment related to franchisee's revenue. Parent company avoids many costs and risks of opening in a host country. A company using franchise entry mode can build great market place all over the world within short time at relative low risk and

Combs J.G. and Castrogiovanni G.J., (1993) argued that a franchise is an organization designed to allow franchisors to obtain the resources needed to accelerate the growth of the company, with the aim of reaching a minimum level of efficiency and thus strengthen the brand awareness.

“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

Franchising has always been an effective and efficient means of expanding businesses and there is a firmly established franchise market in the United States and the United Kingdom. Franchising offers several advantages, such as relatively unsaturated markets, transitioning economies, free-trade zones, friendly business laws, and liberalized markets and most of which come from emerging markets. Lots of multinational companies have chosen to franchise as a means to enter the emerging markets because it is governed by a contractual agreement which provides a desirable competitive advantage. (e.g. Paswan and Kantamneni, 2004; Alon, 2004). Trying to Explain the extraordinary growth of restaurant franchising within the United Kingdom and the United States has been one of the major focuses in the academic franchising literature over a couple of years. In the United States, United Kingdom, Canada, and some other parts of Western Europe, restaurant franchising has attained domestic market saturation, consequently, emerging markets stay relatively unexploited. The establishment of Restaurant franchising in emerging markets is primarily within the last 20-30 years through corporate franchise agreements and master franchises, and to some extent, conversion franchising and joint venture franchising (Alon, I., Falbe, C.M., and Welsh1

The franchising of business is started by several different aspects, the business models as a

Back in the 1960s and 1970s, company and corporations tried to branch out using the franchising scheme, since it’s the safest way for both the franchisor and franchisee. Compared to others, McDonald was way ahead of their competition again when it comes to franchising. Unlike other fast food chains, McDonalds’ executives were interested in expanding their franchises by offering lower franchising fee instead of demanding a large fee up front, sold off the rights to entire territories, and earned money by selling supplies directly to their franchises. Together with their well-known brand recognition, McDonalds continues to expand more and more, just like what Ray Kroc wanted from the beginning. This kind of explained why there are so many McDonalds restaurants compared to others, such as Carl’s Jr and Burgers King. While this might seems like a good business decision for the company, it’s a 2 way knife for franchisee. Instead of demanding large royalties or selling supplies, McDonald became the landlord for most of their franchises. These franchisee have to pay up to 40% markup and that one single contract breach could lead to franchisee’s eviction. Over the years, this eventually turned into a good business for company and as one of McDonalds’ executive put it’’ We are in the real estate business and the only reasons that we were able to sell fifteen cent hamburgers is because it is the only way that help our tenants to us our rent.’’ In other words, to open up a franchise

There are many different manifestations of a franchise, the most common being licensing, product franchising and business format franchising. With product franchising the product

Franchising is a common term in daily life, business discourse, and the law. Nevertheless, the term is used in different contexts and with different meanings. Coughlan, Anderson, Stern, and El-Ansary employ the European Union’s description of franchising as a “…package of industrial or intellectual property rights.” The EU identifies three features of franchising—a common name or sign, with a uniform presentation of the premises, communication of know-how from franchisor to franchisee, and continuing provision of commercial or technical services by the franchisor to the franchisee.