Sonic Case Study

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

Boston Chicken implemented a franchising strategy that differed from most other franchising companies at the time. Boston Chicken focused its expansion through franchising the company through large regional developers rather than selling store franchises to a large number of small franchisees. In that, an established network of 22 regional franchises that targeted their operations in the 60 largest U.S. metropolitan markets and in order to do so, the franchisee would have been an independent experienced businessman with vast financial resources and would be responsible for opening 50 – 100 stored in the region. Boston Chicken focused on widespread

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

Sonic gives a lot of its credit for thriving to its various menu. Although several fast-service restaurant chains have struggled in past years, Sonics same-store sales growth increased in recent quarters by almost 12%. In 2014, traffic provided a large contribution to about half of same-store sales growth and more than two-thirds in the more recent quarter. Net Income progressed 87 percent for second quarter (Watrous, 2015).

20,000 franchise inquiries every year and select 75 to 80, on average, to become new franchise

Moreover, in order to be considered a (potential) franchise owner Wishewan requires a net worth of $350,000, liquid assets of $100,000 and a franchise agreement of 10 years. (Pg. 2) This tactic gives Wishewan an advantage because the franchise

4. With the major shifts on how music is being distributed in the current entertainment industry, E-Sonic’s long term outlook looks promising. We will be able to touch a customer base that we have not been able to before. The current long-term outlook will continue successfully as long as we continue to adapt with change.

The reasons for these acquisitions are varied and include taking over poorly performing restaurants to protect the company’s brand name and to preserver the value of the local market. Reacquisitions also take place for strategic cash flow management purposes whereby investing current free cash flows in the reacquisition yields the expectation of replacing franchise royalties with the larger profits from the restaurants themselves. Company almost always pays some premium related to the contractual element of the franchise right that is capitalized as an intangible asset. However, it must be noted that the classification and nature of the intangible asset varies substantially.

Since the cost of purified β-galactosidase is prohibitive in most intances, the use of sonicated dairy cultures was proposed to produce a relatively impure source of β-galactosidase for a potentially more economical process of lactose hydrolysis.

Sonic Cash ration is 0.38. According to the sonic cash ratio, it seems as if they are making fairly low from each dollar they are spending. However sonic cash operations are 155,756 which I think would need to be looked into.

Opportunities: Strengths: Sonics financial performance has had a great growth in the economy. From 1992-2001, net sales increased annually by 27%,19%,25%,22%,21%,20%,17%,8%,and 18%. And on March 22, 2003, Sonic reported net income of $12.6 billion and revenue increased by 19%. Another opportunity is Sonic is very product differentiated. Sonic is known for its unique made-to-order menu items. Sonic continues to support menu innovations, such as its breakfast menu, Sonic Summer Nights, toaster sandwiches, extra-long cheese coneys, and frozen and fountain favorites. Hamburgers are made to order and served in aluminum foil, preserving the heat and drinks are served in Styrofoam cups to preserve the cold.

Franchise ownership on the other hand is the most preferred form of investment instead of

The KK’s revenue composition seems questionable as well. Most successful franchise companies build their business around the royalty payment. KK, on the other hand, build it around equipment sales. Enlarging the proportion of the franchisee royalties and fees could not only help build a great image for the company but also motivate the franchisees to operate

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

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