Impact Of Geographic Proximity On Firm Performance

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

In Australia exist several restaurants which give to the costumer fast food, as Mc Donald, KFC, Hungry Jack’s, Subway. All of them offer to the costumer fast food, but Subway offer something different as such healthy food.

Schlosser tells us about how many companies expand their businesses by selling franchises. Selling franchises has been successful for many companies such as McDonald’s, Subway, and many others were able to expand using this route. In fact, some fast food companies open up some many franchises, that whenever the same restaurant is opened close to another one, that managers complain of losing business. Another thing the books informs us on is that when a franchise doesn’t work out then the fast food company has no choice than to close that area. Subway does this very often and is called “The worst franchise in America”. Next, the book talks about economics. There is a lot of risk taking when it comes to being a franchisee for a fast food restaurant. People who would like to become future franchisees can spend almost 1.5 million dollars just to become one. Before purchasing a franchise, people have to consider whether or not it will be worth the money, because if it doesn’t work out there is no way that

As a supply-side strategy for influencing the location choices of firms, tax policy is used to address what kind of costs? Do taxes influence location decisions?

Advertising money is spent more efficiently (the franchiser teams up with local franchisees to advertise only in the local area).

Schlosser recognizes that chains and franchises have become more and more prominent in today’s society: "Almost every facet of American life has now been franchised or chained," (Schlosser 13). The increasing number of franchises and chains helps the large corporations behind them to grow themselves and eventually, create more franchises. As consumers, we need to support our local, independent businesses to conserve regional differences and cultures. By obliterating independent businesses,

The main strengths in the production sector are manufacturing for medical devices, drugs & pharmaceuticals, and manufacturing support and weaknesses are the research and development cluster and logistics cluster. The main strengths in the service sector are patient care and education and weaknesses are marketing, human resources, consulting services, laboratories, and financial resources. There are regional externalities, defined by Kitson as “resources that reside outside of individual local firms but which are drawn on directly or indirectly by those firms and which influence their efficiency, innovativeness, flexibility, dynamism, productivity and competitive advantage. A few examples of regional externalities are quality and skills of the labor force, the extent, depth and orientation of social networks and institutional forms, the range and quality of cultural facilities and assets, the presence of an innovative and creative class, and the scale and quality of public infrastructure. He states that the more localized the industrial clusters are, the more intense the interaction will be between Porter’s components of his “competitive diamond” (social embeddedness, existence of facilitative social networks, social capital, and institutional structures) which will increase

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.

The competition to a chain retail grocery store, such as Kroger, is not limited to other

If a new franchise an offer the consumer a quality product at a reduced price, then the chances of success are greatly increased. For example, Chanello’s and Little Caesar’s offer discounted pizza prices, and maintain the same quality as other pizza chains. These companies spend less on advertising and more on the actual product. That’s a very important concept in this industry, because their quality product at this discounted price gives them a niche in the market. Once a company establishes a niche, they become more visible to the

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

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

Firms Faced with Rivals and Advantage of Location The location of firms depends on factors such as cost, quality of inputs and even their availability. These factors can vary from place to place so this gives firms an incentive to locate in the lowest cost locations with other things being equal. The location for most firms is highly dependent on labour costs and raw material costs as these are naturally less mobile place to place and almost completely immobile country to country, capital does not have as much effect on the location of a firm. Differences in labour costs are one determinant of location but on a regional scale in the UK there is not a substantial difference.

The second force that acts on the industry is the threat of new entrants. Fortunately for McDonald’s and it’s over 30,000 restaurants world-wide, the corporation has set itself in a position of dominance. Using a growth strategy, “McDonald’s is continuously expanding its reach which makes it increasingly difficult for new fast food restaurants to enter the industry, through franchising, McDonald’s is able to reach nearly every corner of the globe” (Shell, Ellen Ruppel).

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