...DOING IT RIGHT For those of us experienced in franchising, we are often amazed when companies considering the establishment of a new franchise system (even large, well-established international companies) begin the process at the end - the development of the legal agreements. Presented with a lengthy questionnaire by their legal counsel, they are asked to provide information necessary to prepare franchise agreements and disclosure documents. The problem, though, is that the questions are often their main guide to how their franchise system should be structured. As a potential franchisor you may not fully understand all of the questions or have an independent frame of reference to know what all your available options truly are. The attorneys, knowledgeable in the law and prior agreements, often will provide you with advice and direction. However, without the benefit of being able to evaluate business alternatives, conduct research, and fully explore the strategic considerations that most of these decisions require, the franchise system will often end up operating as a legal vehicle for expansion rather than what it truly should be, a business structure for expansion. Since the franchising process began with the development of legal documents, new franchisors may view their franchise system as a legal device governed primarily by the rule of law. Experienced franchisors understand that while the law is an element of franchising, it truly is a minor portion of the way franchisors...
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...“Smoothie King”, found in Franchising: An Entrepreneur’s Guide. The writer will identify safe ways to send documents through email. The writer will discuss whether that topic is discussed fully in the case and give his/her reasoning behind it. In addition, the writer will choose three information systems used in the case study and describe the purpose of each and its usefulness to the franchisor/franchisee. Introduction Smoothie King promotes a healthier lifestyle by offering smoothies made with real fruit. They offer 40 different varieties that taste great and are good for you. It is no wonder that they were a hot from the beginning. The smoothie giant has been around since 1987 and began franchising in 1988 (Judd & Justis, 2008). Steve Kuhnau started this mega chain in hopes of remedying his allergies and the rest is history. Smoothie King is among the successful franchises that have utilized information systems to get them to where they are today. Information systems are an important part of the plan for success. There is much to be said about a franchise unit that does not operate using an information system. According to Britannica Online an information system is an integrated set of components for collecting, storing, processing, and communicating information. It is the heartbeat of many franchises and allows owners to manage the day-to-day activities of the business. Is It Safe to Send Important Documents via Email? Technology is...
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...An Introduction to Franchising Sponsored by: IFA EDUCATIONAL FOUNDATION © 2010 The IFA Educational Foundation. All Rights Reserved. No part of this book may be reproduced or transmitted in any form, by any means (electronic, photocopying, recording or otherwise), without the written permission of the publisher. IFA Educational Foundation, 1501 K Street, NW, Washington, DC 20005, (202) 628-8000, www.franchise.org. An Introduction to Franchising IFA EDUCATIONAL FOUNDATION Sponsored by: By Barbara Beshel CHAPTER 1 1. 2. 3. 4. 5. An Introduction to Franchising What is a franchise? What are common franchise terms? What are the alternatives to franchising? What are the advantages and disadvantages of owning a franchise? What are the legal issues in franchising? WHAT IS A FRANCHISE? A franchise is the agreement or license between two legally independent parties which gives: • a person or group of people (franchisee) the right to market a product or service using the trademark or trade name of another business (franchisor) • the franchisee the right to market a product or service using the operating methods of the franchisor • the franchisee the obligation to pay the franchisor fees for these rights • the franchisor the obligation to provide rights and support to franchisees FRANCHISE AGREEMENT FRANCHISOR FRANCHISEE Owns trademark or trade name Uses trademark or...
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...Name Course Date Franchising with Burger King Burger King franchising operations started in 1954 basing its market on the success of signature Whopper hamburger. Success was imminent as years later the fast food empire had more than 12,000 burger franchises in United States and other foreign countries. Modern lifestyles and mobility of the business continuously allow fast-food restaurants to enhance its growth due the growing number of new clientele. The positive market prospects make the quick-service restaurants a successful franchising business. Burger King Corporation encourages standardization of the quality and standards of products offered in franchises. Burger King also entices their franchisees with ways of financial operations, training in store management and the preferable storage facilities. However, franchising could be a new or an existing one. As for a new franchise, the applicant has to meet certain set standards to qualify as a franchisee of the Burger King Corporation. Organizing financial information is the first step as a new applicant. This is a requirement in order to qualify as a franchise or for a bank loan if necessary. As at 2012, a potential franchisee was required to have a minimum of $500,000 in liquid assets and a net worth of $1.5 million to qualify as a potential applicant. After that, the applicant has to research on lenders suitable to supply the food commodities at a cost effective franchise loan. The lenders considered are to provide...
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...CHAPTER Franchises and Buyouts What comes to mind when you see the word franchise? For many, it’s a fast-food restaurant. For some, it’s the standardization of America—the same product or service wherever you go. For still others, it is a business model with franchisor rules that must be followed. For Dina Dwyer-Owens, however, it’s a way of teaching “principles and systems of personal and business success so that all people we touch live happier and more successful lives.” Dwyer-Owens is chairwoman and CEO of The Dwyer Group, a holding company of seven service-based franchise organizations: Aire Serv, Glass Doctor, Mr. Appliance, Mr. Electric, Mr. Rooter, Rainbow International, and The Grounds Guys. Founded in 1981 as Rainbow International, The Dwyer Group’s companies were providing services through more than 1,500 franchises in 10 countries by 2012. Don Dwyer, Dwyer-Owens’ father, fit the profile of an entrepreneur. In his youth, he had a newspaper route from which he © CBS Photo Archive/Getty Images In the SPOTLIGHT The Dwyer Group®: Seven Companies, One Code of Values www.dwyergroup.com After studying this chapter, you should be able to… earned over $2 million in today’s dollars by the time he finished college. Later, he bought a motivational materials franchise. His performance so impressed the franchisor that he made Dwyer part of his management team. Dwyer moved on to head Rainbow International, a carpet dyeing and cleaning company...
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...Franchising Law in Malaysia A comprehensive analysis of the Franchise Act Introduction 1. The business of franchising has transformed the face of most business practices in Malaysia and has become a revolutionary way for Malaysian companies to develop, increase their production capability and expand their distribution chain both vertically and horizontally. Franchising fosters business opportunities for Malaysian franchisees, particularly small start-up companies (the “Franchisee”) under the guidance and assistance of another company (the “Franchisor”), which has the requisite experience and knowledge of the market practice and industry. The Franchisee may leverage on the Franchisor’s international and/or regional reputation and goodwill through its use of the Franchisor’s trade marks and intellectual property rights as well as the Franchisor’s tested technologies, trade secrets and business systems. Before the enactment of the Franchise Act 1998 (the “Franchise Act”) on 8 October 1998, franchising in Malaysia was governed by contractual principles and the absence of complex statutory provisions or guidelines allowed parties to freely negotiate the terms of their franchising arrangement. In contrast, the Franchise Act highly regulates the franchising industry as it not only controls the terms of any franchise agreement but also implements a systematic scheme of registration for the Franchisor, Franchisee and franchise brokers. Although this has created a regimented...
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...BA336 Human Factors in Small Businesses Case study for The Appeal of Franchising Zhuo Xu (7751) Question 1: From this case we can know franchisees also benefit from the franchisor’s business experience. In fact, experience is, in essence, what a franchisee buys from a franchisor. Franchising can be the ideal path to owning a business for people in almost any phase of professional life, whether they are retirees looking for a new direction and extra income or recent college graduates who are ready to embark on exciting careers. “Boosted by a brand name, training, advertising, and an established business plan, a franchise can ease the struggle and the risk of opening a business and still let you call some shots. Question 2: Investing in a franchise means that rather than staring your business entirely from scratch, you pay a franchise fee and often royalty fees for the right to operate under an established trade name. Franchising has increased significantly in the early 21st century, as more franchisors have used this approach to expand their businesses rather than opening more corporate stores. While beneficial because of the known entity factor, franchises do present some drawbacks for investors. One difficult with a franchise is that you share some of your business success with the franchisor. Some franchisors charge one or the other, but some charge both. This means that even if you are successful, you may constantly be giving up a piece of the pie. Ongoing...
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...Small Business Management Joseph Lofoco Strayer University Professor Willie Robinson October 31, 2010 Abstract In this paper I will answer the following questions about My Friend’s Bookstore Plan: 1. Describe what would happen to the cash position and cash flow of My Friends’ Bookstore if the owners decided to open another store. 2. Is My Friends’ Bookstore a good candidate for franchising? Explain and defend your answer. 3. Describe what the owners would have to do to prepare to franchise their business. 4. The three partners own the bookstore equally. What are some of the difficulties they may encounter in sharing management duties equally? 5. What processes might the owners put in place to clarify their duties as equal partners? Small Business Management 1. Describe what would happen to the cash position and cash flow of My Friends’ Bookstore if the owners decided to open another store. The cash position of My Friend’s Bookstore would decrease if the owners decided to open an additional store due to the amount of cash or equivalent instruments held during this transition would transfer to the other store to initiate the start up of this business and the start up costs would most likely be taken from...
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...Dunkin' Donuts Download the full 2012 Dunkin' Donuts Franchise Disclosure Document here.For a full list of our downloadable FDDs please click HERE.The Franchise Disclosure Document (FDD) is a requirement by the FTC. All franchisors are obliged to provide the FDD to prospective franchisees before they commit to investing in a new franchise. The FDD is of great importance to prospective franchisees because it contains important information about the franchise. The FDD provides key financial information such as the initial fees payable to the franchisor, annual royalties, likely start-up costs and probably most importantly, likely earnings from owning a franchise unit. If you are interested in finding out more about a franchise, it is essential that you get a copy of their latest FDD. | | Date Incorporation: 1954 Franchising Since: 1955 Headquarters: Canton, Massachusetts Business Description: A Dunkin' Donuts Store sells coffee, donuts, bagels, muffins, compatible bakery products, sandwiches, as well as other food items and beverages compatible with the franchisor’s concept. Franchise Offer: The franchise offered is for the right to operate a Restaurant, selling doughnuts, coffee, bagels, muffins, compatible bakery products, croissants, pizzas, snacks and other sandwiches and beverages that Dunkin’ Donuts approves. Dunkin’ Donuts encourages franchisees to develop a network of Restaurants within a targeted area or areas under the Store Development Program. ...
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...9 questions to ask before purchasing a franchise Franchising Articles Visit Website Send Email Close Nine questions you simply have to ask before you purchase a franchise; questions for the franchisor under scrutiny and questions to ask yourself and which demand an honest answer. Careful consideration of the issues to hand will set you in good stead whichever franchise you decide to buy. When an enthusiastic buyer signs' on the dotted line and looks forward to opening up his or her franchise there will have been a host of questions thrown around in discussions about the business. Some franchisors are tough on their potential franchisees and put them through their paces before accepting them into the fold, others are less stringent and embrace new blood with enthusiasm and an open mind. For the franchisee with a huge financial and personal commitment to make their new business a success asking questions of themselves and the franchisor is never a waste of time; it serves to clarify issues and to add a sense of objectivity to what can be an emotional period. After all, everyone buys a franchise to make money so the overall agenda has to be to achieve financial goals and to ensure the choice you make will suit you and your ambition. 1. What is your vision and strategy for the brand? When franchisees are conducting the necessary due diligence on their franchise system of choice, it is far too often focused solely on the numbers, suggests David Stafford, executive consultant...
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...About Franchising Franchising is a long-term cooperative relationship between two entities—a franchisor and one or more franchisees—that is based on an agreement in which the franchisor provides a licensed privilege to the franchisee to do business. The franchisor grants the franchisee the right to use a developed concept, including trademarks and brand names, production, service and marketing methods and the entire business operation model, for a fee. The franchisee then provides the time, capital, and desire to utilize the brand and services provided by the franchisor to build a thriving business. The product, method or service being marketed is usually identified by the franchisor's brand name, and the holder of the privilege (franchisee) is often given exclusive access to a defined geographical area for a defined period of time, all of which is defined in the Franchise Agreement. Franchise a privilege or right officially granted to offer specific products or services under explicit guidelines at a certain location for a declared period of time. Franchise Agreement The legal document between the Franchisor and the Franchisee that governs the relationship between the two entities for a specified period of time. It frames the relationship in a concise manner. Franchisee A person or entity to whom the right to conduct a business is granted by the franchisor or licensor. Franchisor the Company owning/controlling the rights to grant franchises to potential franchisees...
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...1. Franchising can be described as a 'business marriage' between a 'franchisee' and a 'franchisor'. As the franchisee - the purchaser of the franchise - you pay an initial investment for the licensed rights to operate under an established brand, and to be trained and supported by a central franchisor. The 'marriage' is protected by a Franchise Agreement which provides you with an exclusive territory for a set period of time on a renewable basis. Franchising is one of three business strategies a company may use in capturing market share. The others are company owned units or a combination of company owned and franchised units. Franchising is a business strategy for getting and keeping customers. It is a marketing system for creating an image in the minds of current and future customers about how the company's products and services can help them. It is a method for distributing products and services that satisfy customer needs. Franchising is a network of interdependent business relationships that allows a number of people to share: • A brand identification • A successful method of doing business • A proven marketing and distribution system In short, franchising is a strategic alliance between groups of people who have specific relationships and responsibilities with a common goal to dominate markets, i.e., to get and keep more customers than their competitors. There are many misconceptions about franchising, but probably the most widely held is that you as a franchisee...
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...Chapter 6 Franchising and the Entrepreneur Part 1: Learning Objectives 1. Describe the three types of franchising: trade name, product distribution, and pure. 2. Explain the benefits and the drawbacks of buying a franchise. 3. Understand the laws covering franchise purchases. 4. Discuss the right way to buy a franchise. 5. Outline the major trends shaping franchising. Part 2: Class Instruction Introduction The number of franchises has grown tremendously. The number of U.S. franchises has increased consistently since the 1970s, and the continued growth since the mid–1980s documents that franchises continues to play a significant role in the U.S. and world business economy. Franchising is a business structure comprised of semi–independent business owners (referred to as the franchisees) that pay fees and royalties to a parent company (referred to as the franchiser) in return for the right to be identified with its trademark, to sell its products or services, and often to use its business format and system. As presented in Figure 6.1: The Franchising Relationship on page 196, the connection between the franchiser and the franchisee is a unique and often a highly structured and defined business relationship regarding: • Site selection • Design • Employees • Products and services • Prices • Purchasing • Advertising • Quality control • Support Types of Franchises ...
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...Part 2 A. Introduction Franchise is a method of marketing and distributing based on a two parties relationship; that is the franchisor (the owner and granter of right) and the franchisee (recipient of right) relationship. The right granted is for the purpose of running the business by using the trademark or trade name based on a specific system, at specified location or area within a specified period of time (Malaysian Franchise Association). Types of Franchise There are two main types of franchising; which are product distribution franchise and business format franchise (Beshel. B,2010). The product distribution franchises just simply sell the franchisor’s products and are supplier-dealer relationships. Under this type of franchising, the franchisor licenses its trademark and logo to the franchisees but the entire system for running their business is not provided by franchisor. There are some popular industries which lying under products distribution franchises; they are drink distributors, automobile dealers and gas stations. Pepsi, Shell, Toyota are some examples in this category. Product distribution franchise issues tend to be found in the vertical restraint literature. They typically focus on issues of exclusive dealing, inventory controls and the problem of double marginalization. Double marginalization (Kevin. J.W. 2007) refers to the problem of both a wholesaler and retailer using a price markup formula. The wholesaler sells his good to a retailer at the wholesaler’s...
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...After the Rubbish Boys case, I discovered that using a franchising model to grow business seems to be a good option for “King” type entrepreneurs. Brian is able to keep 100% of the company all the way because the franchising model helps minimize the capital he needs to scale the business, therefore eliminates the need to give away equity for money. In addition, the one-sided franchising contract gives the franchisor security to hand the operation to another entrepreneur without worrying losing equity and control. However, I think that Brain’s success was a bit of luck. Franchisees join a franchise business because they want to own a business of which the business model has been proven and tested, the revenue and required investment are more or less known, and ideally the existing brand equity can be leveraged to get the new franchise up to speed fairly quickly. In Rubbish Boy’s case, the company didn’t meet any of these criteria. Brian had just decided to switch from the student franchising model to a professional one, with the new pricing and operations untested; it was unclear how much the franchisee will earn and invest; and there was certainly no brand recognition at all. That was probably why Brian couldn’t find any franchisee to start with and had to turn to an internal management team member. That being said, every franchisor needs a “pilot franchisee” to start with in order to successfully set up his/her own franchise model, and Paul Guy was Brian’s pilot franchisee...
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