The Advantages and Disadvantages of Franchising in France

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

Franchising agreement compare to licensing agreement tends to be longer and the franchisor offers a broader

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 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

Franchise means “privilege” or “freedom” and the word originates from an old French dialect. The history of franchising can be traced back to the Middle Ages (476 A.D. – 1453 A.D.) when kings granted franchises to specific people or groups to perform a certain type of commercial activity or hunt on their land. German breweries in the 1840s also used franchising to distribute their beer to different geographic areas. The breweries granted the franchises to certain taverns to be the sole distributor of their beer in a specific area. Isaac Singer was known to pioneer the use of written franchise agreements. In the 1850’s, Isaac Singer started granting franchises for its sewing machines because he wanted to distribute his sewing machines to customers

When buying into the company you sign a contract to firstly “buy” into the company, and then you have to pay royalties and a certain percentage of your earnings back to the head company. A positive of franchise agreements is that it allows companies to enter into the foreign market place with out having to put too much money into it. For example, 7- elevens in Australia are all franchises, the fist few franchises in Australia would have been set up as an experiment to see whether the Australian public would embrace the new chain store. The feedback would have been that Australia was pro 7-eleven and now you can walk through the city without seeing one on every corner. Another positive of selling your company as a franchise is that you can earn royalties. Different franchises have different royalty schemes, many expect you to pay a certain fee for the “name” each year and then pay them a percentage of the earnings. 7-eleven was taking 51 cents of every dollar made. This allows the head office to make money on the side while not having to invest more money into a situation where it could

Multinational companies opt to franchise as a way of expansion strategy (Siebert, n.d.). Chick-fil-A is dominant only in the US market. The firm has only ventured into the Canadian market in the airport of Calgary. Many United States Corporations have engaged in franchising in the United States as a form of the expansion strategy. Laws concerning franchising are neither strict in Canada. Our form of non-equity mode will be franchising, therefore our form of entry will be a small-scale entry. This will allow our company to get exposure in key locations and learn from Canadian consumers. The benefit to franchising at first is that it is less costly and less risky for the franchisor.

Franchising is defined as “a commercial agreement between a party that owns a trade name or trademark (the franchisor) and party that sells or distributes goods or services using that trade name or trademark (the franchisee) (Kubasek et al., 2015, p. 431). There are key advantages for choosing a franchise when starting a new business. First, there is many times instant brand awareness that is identifiable by potential customers, which you as a new owner do not have to concentrate on building. Secondly, on-going marketing of your business is backed by the power of the established brand, and could be as simple as contributing a fee to a advertising fund that is driven by the franchisor. Thirdly, the Return on Investment (ROI) will most likely be faster as the customers are “ready-made” and eager to buy your product or service. Fourthly, the franchise model provides a built-in support model, both from the franchisor and from other franchisees throughout the region and nation. Lastly, the franchise will provide consistent and extensive training in every aspect of the business (Goldberg, 2015).

This report analyses the expansion of Michel’s Patisserie into the Chinese market through the creation of joint venture franchise agreements. Michel’s will be evaluated based on the motivations for expanding to China, process of internationalisation, choice of entry mode, and standardisation versus adaptation decisions. This analysis will be undertaken so that recommendations can be made to determine the most effective means of securing the future success of Michel’s in Shanghai. It will be demonstrated that while the motivations for expansion were fundamentally sound

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

Benefits that would get by the both parties which is franchisor and franchise through different useful Franchise Development Programme from different organization such as lower their business risks, get the maximum profit and so on. In the case study that our group chosen is Ayamas, franchisee would get the lower business risks that means the business risk will decrease to minimum and the franchisee no need to worry about their business will make them bankrupt because the risk is low. Next, opportunity to market goods or services that are acceptable in the market which means the goods or service must have acceptable by the public and follow the rules of the country. For example, in Malaysia, foods that are halal must have registered the certificate of halal and stamp the logo of halal on the foods to show that it is safe for muslin. It would get the market to sell halal foods in Malaysia. Economic benefits of scale is one of the benefits for franchisee. It means franchisee can enjoy the benefits of economies of scale that are bring high profit and money return to their business.

The positive outcome of this strategy is that the company is easy to control the market. It is because through the franchising, the local company needs to get the agreement contract from the main company. The local company can manage the local market well because it has already familiar with the cultural of that country. The negative outcome is that the local company didn’t follow the rules that have set by the main company and boycott them because they take control of the business.

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

The food retailing business requires a high level of national differentiation/ local responsiveness. In my opinion, this also explains the use of licensing. A company like 7-Eleven has to take a lot of factors into account in each country. The way the Japanese eat, and like their high levels of service everywhere differs completely from the way that the Europeans do, and also, even within a country habits differ in different regions. Then, there are the extensive distribution channels to consider for each country, in order to get the wide variety of products into the stores. With licensing, the demand on management is low, and therefore the risks as well.

Licensing differs from contract manufacturing in that more value chain functions have been transferred to the licensee. In outsourcing production and downstream activities a licensor firm can concentrate on its core competences and therefore will remain technologically superior in its product development- for example Apple licenses its brand to manufacturers of accessory products, and the BBC licenses rights to broadcast TV shows around the world. However a lack of control over licensor operations and therefore quality may lead a company to use franchising (a sub variant of licensing) in which the franchisor gives a right to the franchisee against a