Esbm8 Ppt04 Notes

Franchising and the Entrepreneur
Chapter 4 Franchising
Copyright 2006 Prentice Hall Publishing Company
The Franchising Boom!!!

Sales exceeding $1 trillion from virtually every product or service imaginable. One out of 12 retail businesses in the U.S. is a franchised operation. Franchise sales account for 40% of total retail sales. A new franchise opens somewhere in the world every six-and-a-half minutes and in the United States every eight minutes.
Copyright 2006 Prentice Hall Publishing Company 2
Franchising Grow th Num ber of Units (in Thousands)
400,000
Number of Franchised Units (in Thousands)
350,000 300,000 250,000 200,000 150,000 100,000 50,000 2000 2001

290,605 274,265
341,579 310,044
337,693
351,459
2002 Year
2003
2004
2005
Franchising
Franchising semi-independent business owners pay fees and royalties to a parent company in exchange for the right to sell its products and services under the franchisers trade name and often to use its business format and system.
Types of Franchising

Tradename Product distribution Pure (Business format)
Why Buy a Franchise?

Franchisees benefit from the franchisers experience. Franchisees get a proven business system and avoid having to learn by trial-and-error. Franchisees earn a great deal of satisfaction from their work. Before buying, ask: What can a franchise do for me that I cannot do for myself?
Benefits of Franchising
Business system Management training and support Brand name appeal Standardized quality of goods and services National advertising program
Benefits of Franchising
Financial assistance Proven products and business formats Centralized buying power Site selection and territorial protection Greater chance for success
Chapter 4 Franchising Copyright 2006 Prentice Hall Publishing Company 8
Drawbacks of Franchising
Franchise fees and profit sharing Strict adherence to standardized operations Restrictions on purchasing Limited product line Unsatisfactory training programs Market saturation Less freedom
Drawbacks of Franchising
Limited product line Unsatisfactory training programs Market saturation Less freedom
10
Ten Myths of Franchising

1.
2.
3.
Franchising is the safest way to go into business because franchises never fail. Ill be able to open my franchise for less money than the franchiser estimates. The bigger the franchise organization, the more successful Ill be.

4.
5. 6.
Ill use 80 percent of the franchisers business system, but Ill improve upon it by substituting my experience and know-how. All franchises are the same. I dont have to be a hands-on manager. I can be an absentee owner and be very successful.

7.
8. 9.
10.
Anyone can be a satisfied, successful franchise owner. Franchising is the cheapest way to get into business for yourself. The franchiser will solve my business problems for me; after all, thats why I pay an on-going royalty. Once I open my franchise, Ill be able to run things the way I want to.
What Do Franchisers Look for in a Franchisee?

Yes No Maybe

Experienced? Hard Working? Team Player? Leadership & Management Skills? Risk Averse? Educated? Financially Stable? A Desire to Succeed?

Yes No Maybe


Yes No Maybe


Yes No Maybe


Yes No Maybe


Yes No Maybe


Yes No Maybe


Yes No Maybe


Yes No Maybe

Franchising and the Law

Key protection is the Uniform Franchise Offering Circular (UFOC). Franchisers must deliver a copy of UFOC before any offer or sale of a franchise.
23
Franchising and the Law
The UFOC contains information on 23 topics, including:

Franchisers
business experience Franchise fees and costs Lawsuits involving the franchiser Financial assistance available Territorial protection granted Restrictions on purchasing
Detecting Dishonest Franchisers

Claims that the contract is standard; no need to read it. Failure to provide a copy of the required disclosure documents. Marginally successful prototype or no prototype. Poorly prepared operations manual. Unsolicited testimonial from a highly successful franchisee.

(Continued)
Unusual amount of litigation by franchisees. Promises of future earnings with no documentation. High franchisee turnover or termination rate. Attempts to discourage your attorney from evaluating the contract before signing it.

(Continued)
No written documentation. High pressure sale. Claims to be exempt from federal disclosure laws. "Get rich quick" schemes, promising huge profits with minimal effort. Reluctance to provide a list of existing franchisees. Evasive, vague answers to your questions.
How to Buy a Franchise

Preparation, common sense, and patience are vital ingredients in choosing the right franchise. Evaluate yourself - What do you like and dislike? Research the market. Consider your franchise options. Get a copy of the franchisers Uniform Franchise Offering Circular (UFOC) and study it.
What Should You Look For?

A unique concept or marketing approach Profitability A registered trademark
29
What Should You Look For?

A business system that works A solid training program Affordability A positive relationship with franchisees
(Continued)
30
How to Buy a Franchise

(Continued)
Talk to existing franchisees. Ask the franchiser some tough questions. Make your choice.
31
Table 4.4 Advantages and Disadvantages of Buying a New vs. an Established Franchise Pros
Can be new and exciting Business concept can be fresh and different in the market Possibility of getting lower fees as a pioneer of the concept Potential for a high return on investment Business concept likely is wellknown to consumers and market for the products or services is already established. Franchiser has experience in delivering services to franchisees Franchiser has had time to work the bugs out of the business system
Cons
Business is not tested or established in the market Unknown brand and trademark Possibility that the concept is a fad with no staying power Franchiser may lack the experience to deliver valuable services to franchisees High franchise fees and costs that often are non-negotiable Concept may be on the wane in the market Franchisers brand and trademark may remind customers of an outdated concept Franchisers trade dress may be in need of updating and redesigning
New Franchise
Established Franchise
Source: Based on Andrew A. Caffey, Age Issues, Entrepreneur, January 2002. p. 118.
Franchise Contracts
40% of New Franchisees Sign Contracts Without Reading Them !!!
Note clauses covering: Termination Renewal Transfers and Buybacks

Chapter 4 Franchising Copyright 2006 Prentice Hall Publishing Company
Contract
33
Three major Growth waves

1970s : Fast food industry 1980s : services 1990s today: low-cost franchises focus on specific market niches
34
Trends Shaping Franchising

International opportunities Smaller, nontraditional locations Conversion franchising
35
Trends Shaping Franchising

Multiple-unit franchising Master franchising Piggybacking (Combination franchising) Serving aging baby boomers
36
Franchising Web Sites
http://www.entrepreneur.com/Franchi se_Zone/FZ_FrontDoor/0,4670,,00.ht ml Subway Sandwiches and Salads http://www.subway.com/ Auntie Annes Pretzels http://www.auntieannes.com/
Entrepreneurs Franchise Zone

Esbm8 Ppt04 Notes

Încărcat de

Informații document

Descriere originală:

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Esbm8 Ppt04 Notes

Încărcat de

Drepturi de autor:

Formate disponibile

Franchising and the Entrepreneur

Copyright 2006 Prentice Hall Publishing Company

The Franchising Boom!!!

Franchising Grow th Num ber of Units (in Thousands)

Number of Franchised Units (in Thousands)

350,000 300,000 250,000 200,000 150,000 100,000 50,000 2000 2001

Copyright 2006 Prentice Hall Publishing Company

Copyright 2006 Prentice Hall Publishing Company

Tradename Product distribution Pure (Business format)

Copyright 2006 Prentice Hall Publishing Company

Why Buy a Franchise?

Copyright 2006 Prentice Hall Publishing Company

Copyright 2006 Prentice Hall Publishing Company

Chapter 4 Franchising Copyright 2006 Prentice Hall Publishing Company 8

Chapter 4 Franchising Copyright 2006 Prentice Hall Publishing Company 9

Copyright 2006 Prentice Hall Publishing Company

Ten Myths of Franchising

Ten Myths of Franchising

Ten Myths of Franchising

What Do Franchisers Look for in a Franchisee?

What Do Franchisers Look for in a Franchisee?

What Do Franchisers Look for in a Franchisee?

What Do Franchisers Look for in a Franchisee?

What Do Franchisers Look for in a Franchisee?

What Do Franchisers Look for in a Franchisee?

What Do Franchisers Look for in a Franchisee?

What Do Franchisers Look for in a Franchisee?

What Do Franchisers Look for in a Franchisee?

Franchising and the Law

Copyright 2006 Prentice Hall Publishing Company

Franchising and the Law

The UFOC contains information on 23 topics, including:

Detecting Dishonest Franchisers

Detecting Dishonest Franchisers

Detecting Dishonest Franchisers

How to Buy a Franchise

What Should You Look For?

Copyright 2006 Prentice Hall Publishing Company

What Should You Look For?

Copyright 2006 Prentice Hall Publishing Company

How to Buy a Franchise

Copyright 2006 Prentice Hall Publishing Company

Note clauses covering: Termination Renewal Transfers and Buybacks

Three major Growth waves

Copyright 2006 Prentice Hall Publishing Company

Trends Shaping Franchising

Copyright 2006 Prentice Hall Publishing Company

Trends Shaping Franchising

Copyright 2006 Prentice Hall Publishing Company

Franchising Web Sites

Entrepreneurs Franchise Zone

S-ar putea să vă placă și