Summary of Reacquired Franchise Rights Essay

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

A franchise as a separable intangible asset (ie. the license to operate a franchise). The company purchased the franchise for $100,000. There is an active market for this asset. There is even a current market price for this asset ($200,000). Therefore this asset can be revalued to fair value.

Franchise is treated as a form of business that is more popular during the present context. Its popularity has to do with its proven track record of success,

The corporate units make up less than 1% of the corporation, (Denny’s, 1953, p. 2). With the majority of the corporation made up of franchise owners it develops an in consistency that provides a weakness to threats and vulnerabilities. The problem that consists in many of the restaurants that has become familiar is in consistency with change. The general change from the corporate restaurants to franchise restaurants is consistent but the operations that are held on a daily basis within the restaurants vary from restaurant to restaurant. One of the main down falls in the units is the fact that the franchise owners will solely look at their profit and loss statements. They will be breathing right behind the unit if it is not making the bottom line a profit, as long as the unit has a profit and survey scores are 75%, other issues are invisible. This is a short- term gain but a long- term loss and a vulnerability to threat of their appropriate assets. One of the main issues is the company would rather hire a weak physical security company. The franchises figure if they are making money and have a body that looks to be that of authority they will secure their assets and continue to bring in a financial gain. What they do not seem to realize is if the physical security does not have the strength and reliability to match their image then they will lose

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.

Today’s generation is filled with people who want to own their own businesses and be their own boss, however, crossing an individual who intends on building their ideas from the ground up is rare because the process absorbs time and finances. For this reason, franchises are becoming more popular in the business world. In this system, an established business sells a portion of temporary ownership to a franchisee, in which the franchisee must incorporate the franchisor’s existing framework and practices in exchange for a managerial role. The franchisor Findings Popeyes Louisiana Kitchen Franchise Popeyes Louisiana Kitchen creates, runs, and franchises restaurants that specialize in the quick servicing of spicy chicken, buttery biscuits, red

* Franchise Financing: Financing new locations, acquisitions, reimaging, debt restructuring, refinancing. Franchise restaurants, chain restaurants and limited service hotels.

This Literature review explains if a franchise is high or low risk way of entering into a market. It also explains whether a franchisee is suited for a certain franchise. Franchises can be seen all over the world, with everyone being introduced to them, as consumers, from a young age (Longenecker et al., 2011). Thomas and Seid (2000) agree with this and believes due to it, people think they understand a lot more about a franchise than they actually do, creating myths about the rate of success and the ease of entry. Antitrust Law and Economics of Product Distribution (2006, p.5) defines a franchise in a 3 part way as, “(1) a franchisee (a) offers, sells or distributes a franchisor’s goods or services, which are identified by

2.1. The risk of failure in a franchise business in Brazil is very low compared to non-franchise businesses. This assertion is made based on a source (Geromel, 2012) that included this statement as part of an article claiming that franchising is the best way of investing in Brazil. The source supports the claim that franchising is a good investment in Brazil by

The case explains there is one fast food franchise operating in a medium-sized metropolitan area. The owner of that particular fast food franchise holds the right to operate that fast food restaurant in that particular metropolitan area. There is only single outlet of that fast food franchise which is currently operating and is very popular as well. Since there is only one outlet and is very popular there are often customers who wait to get service from that fast food. Hence considering this problem and keeping in mind and realizing the shortage of the fast food outlet, its owner is now thinking to add one or more outlet to that running outlet. So, before owner actually derives to final decision whether to add extra outlet or not. He should investigate various factors and should also consider various tradeoffs in opening one additional site compared to opening several additional sites. This is briefly analyzed as follows.

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

According to Daniels(2004), franchising is a specialized form of licensing for the franchisor. Not only sells an independent franchisee the use of the intangible property essential to the franchisee’ business but also operationally assists the business on a continuing basis through training and sales promotion.

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

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