Operating Standards Paper

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 workplace is a delicate environment filled with different personalities types. These differing needs of feeling safe and comfortable create many challenges in the workplace. The creation of the Human Resource Department has helped create a safety net for all employees to fall under and create a stable environment for employees to feel safe and secure. Regulations such as Equal Employment Opportunity Commission and the Department of Labor have in some ways removed the common sense and compassion in the workplace and replaced it with litigation. The effect of these regulations have balanced the workplace and created a more

With respects to prevention it is imperative to the legal materials than it is to looking at solving complications after the fact for one’s that are existing. Preventive measures (PM) are a better alternative than trying to fix complications. When establishments do not take the Equal Employment Opportunity (EEO) laws seriously, and they do not have any preventive measures to stop things that can lead to legal actions they will always have a problematic and a less than efficient establishment.

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.

And franchisors, by design, exert indirect control over their franchisees and franchisee’s employees by way of licensing out the operation of their brand. In traditional franchise agreements, the franchisee is an independent business owner with a license to use the franchisor’s trademarks and other intellectual property as part of a royalty or fee arrangement. The ruling, which states that “setting productivity standards” is a form of indirect control, understandably has franchisors and franchise attorneys seeking shelter.

As I frequent the restaurant I have seen first-hand that the management would need an over haul if franchises were ever to be a possibility. Managers at different locations do things differently. An example is the way their subs are made. At one location, onions and tomatoes are put on the Italian sub at another location, these items are not a usual topping, so you must ask for them. There are some difference that would need to more uniform. I understand franchises have their own personal touches to products however the product should have more universal likeness as it is the same

First are those that specifically apply to franchises, and the steps that must be completed to be a franchisor or franchisee. Per the Federal Trade Commission’s Franchise Rule, all franchisors must provide full disclosure prior to entering a franchise agreement, which includes a franchise notice from the FTC that informs potential franchises that they should read everything in the agreement. This is because the FTC does not read or approve every franchise agreement individually. A franchise agreement should also include any information pertaining to the operation of the franchise, including any situation that would result in termination of the franchise. Acceptable reasons are typically listed in the Uniform Franchise Offering Circular which is used in some states but not Alabama. The state of Alabama, where this case occurred, does not currently have any specific franchise laws but they still abide to the Federal Franchise Rule. This case also predates the establishment of the franchise disclosure document by the FTC in 2007, which requires franchise agreements to include acceptable grounds for termination. Even without this more recent legislation, it was common practice for a larger franchisor, such as Ramada Inns, to include proper grounds for termination in a franchise agreement. If this was the case, each party owes a duty to adhere to and perform the terms of the contract because a lawful franchise contract is an enforceable contract under the law. Furthermore, most franchise agreements permit a franchisor to terminate the franchise for cause. An example of just cause would be failure by the franchisee to pay franchise fees or meet legitimate quality-control standards. It would not be considered just cause for termination if a franchisee only failed to meet standards once. After all, it is “A franchisor’s ability to maintain the public’s perception of the quality of the goods and services

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.

Macdonald’s offers a strict, but mutually beneficial franchising and licensing agreements that have a term of 20 years (McDonald’s, 2014). Before an individual obtains a franchise or a licensing opportunity, a careful scrutiny of the restaurant location must conform to expectation of future growth of the business. The scrutiny ensures long-term profitability of the restaurant. The process of setting up a restaurant is very thorough. The franchising and licensing agreement allows the corporation to have enough cash for further expansion. Expansion creates dominance and goes a long way to stamp authority as a

Franchisees may face competition from other franchisees, from outlets that owned by Melt Bar and Grill. The initial contract term will be 10 years commencing on the date the franchisee opens the restaurant for business. If the franchisee is in good standing, he or she can renew for two additional periods of five years each. If franchisees operate a restaurant, they must be personally involved in the operation of the Restaurant on a full-time basis; also, they are not allowed to delegate the day-to-day management responsibilities to a manager. The franchisee responsible for the operation of his or her restaurant must complete the training course. During the term of the contract, the franchisee or an officer, director, shareholder, member, partner, Control Person, trustee or equity owner of the franchisee’s legal entity approved by Melt Bar and Grill, must spend a minimum of 40 hours per week at the Restaurant overseeing and supervising the operation of the Restaurant. The franchisee must devote at least eight hours per week of physical presence at the Restaurant during open and operating hours. In addition, the franchisee must assure that he or she is actually supervising the operation of the restaurant during all open and operating

Taking on board the enterprising ideas the franchisee puts across would essentially be the franchisor wasting effort and money in the perfecting of their pre-set method. This is especially the case with larger, more established franchises such as Subway and McDonalds, whereby every task is responded to in a set way and is quantified to the smallest factor. An example of this is when changing the uniform at McDonalds in 2012, it cost over £1.52 million in the UK alone due to the vast number of employees (Weiss 2012). From cleaning the floors to dealing with food complaints, even the smallest change in the franchisors technique requires a great amount of communication and control, but is also a timely and therefore costly exercise. This then reflects the reluctant attitude to established Franchises when considering the great cost and risk involved in the context of someone entrepreneurial. The franchise already has the fine details of the business set into its own convention; entrepreneurial individuals only cause a constant battle with the franchisor due to the desire for change and sometimes, change for change’s sake.

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

♦ Reliance on franchising "associate" stores and opening a few new company-owned stores as a means of expanding nationally and internationally. However, franchise licenses were granted only to candidates who have experience in multi-unit food establishments and who possess adequate capital to finance the opening of new stores in their assigned territory.

Process: All processes are controlled very tightly through the franchise agreement. Key processes relate to menu, cooking procedures, training, uniforms, signage, etc. The franchise agreement provides information relating to the extent to which Roy Rogers exercises control over key inputs and processes.