...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 trade name Provides support: • (sometimes) financing • advertising and marketing • training Expands business with franchisors support Receives Fees Pays Fees THE IFA EDUCATIONAL FOUNDATION AN INTRODUCTION TO FRANCHISING 5 TYPES OF FRANCHISES PRODUCT DISTRIBUTION Product distribution franchises simply sell the franchisor’s...
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...Many people dream of starting their own business and being their own boss calling all the shots. Before starting a business, entrepreneurs must think about what kind of business they want to start and under what Forms. The different kind of forms to consider is sole proprietorship, partnership, corporation, and franchise. Each form is tailored to certain kind of business and knowing the details of each will enhance the business strategy. Sole proprietorship: This form of business structure is mostly used by someone who owns a business by themselves. An example of this type of business in someone starting a home based business such as direct sales. Selling merchandise out of a home office is ideal for new start-ups because the direct sales company usually has an easy to follow plan to where the business owner only has to implement that plan. The advantage to owning this type of business is the owner is in complete control and can work as much or as little as needed. Other advantage is the owner can keep control of inventory, does not have to worry about rental space cost and business owner is able to take advantage of the tax breaks for operating out of the house. The disadvantage is that the owner is in complete control and is responsible for marketing, budgeting and any labiality claim towards the business. Partnership A partnership business is similar to a sole proprietorship but instead of just one owner, there are usually two or more owners. For instance...
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...Mauricio Barajas Jaimes ID: 000208124 March 8, 2015 INVESTIGATION ON FRANCHISES PRODUCT FRANCHISE: HUSSE http://www.franchise.com/franchise/pet-animal/mobile/husse-arizona/company-information.cfm Characteristics: local pet food Delivery Company with the same benefits as a global company. Headquartered in Stockholm, Husse is the European leader in the home delivery of dog, cat and horse products under the Husse brand. How does the brand work? * You work from home and decide for yourself how you spend your time. * Deliver premium and super premium products directly to the customer’s door. * Generate new customers through local farmers markets, door to door, dog / cat or horse shows, ewspapers, flyers, visiting breeders, social media, sponsor events or other activities. * Administrate your orders and customers via a customized intranet system. Total Investment Range: $11,250 - $25,000 dollars Initial Fee: The franchise fees start as low as $11,250 Area Coverage: Today more than 750 franchisees and distributors operate a Husse business in more than 45 countries.Take advantage of Husse's efficiency, low costs and minimal administration. Requirements from the Franchise: The requirements for getting started are: Invest in the franchise license, Invest in a red car according to our guidelines, Complete the initial training. (2 full days) and that most franchisees store their stock in a spare room or climate controlled basement/garage. An...
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...Donald Frey Business Organization and ADR Choosing to start a business requires making major decisions and determining what form of business to undertake may be the decision of one person or several people. After the decision has been made on what type of business to start, it will be important to put in place an alternative resolution dispute process to have solve disputes that may face the company. The vendors that have been contracted have a clause for venue for litigation and in the event of litigation a decision needs to be made where the venue will be. Tracey has always been interested in opening a Papa Johns since she was the General Manager ten years ago. After moving back to Baltimore, Maryland she had enough saved to begin the process of purchasing a Papa Johns’ franchise. “Because franchisors are usually larger than franchisees and have more resources, they often have the upper hand in franchise relationships. However, federal and state laws have been established to protect the franchisee. Thus, contract law, and the Uniform Commercial Code in particular apply. If the terms of the contact are not met, either side can sue for breach of contract” ((Kubasek, Browne, Herron, Giampetro-Meyer, Barkacs, Dhooge, & Wiliamson, 2012, p. 785). There are several advantages to owning a franchise. The most important advantage of owning a Papa John’s franchise is the low failure rate. Because Papa Johns was established...
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...La Voz Register | Sign In Submit Chron.com Local Directory Home Local US & World Sports Business Entertainment Lifestyle Jobs Cars Real Estate Find&Save in Houston Small Businessby Demand Media501C3s|Advantages of Organizational Structure|Business Models|Business Structures|Charitable Organizations|Flat Organizational Structure|For Profit Businesses|Franchise a Business|More » Small Business > Business Models & Organizational Structure Business Models & Organizational Structure Definition of a Managing Partner of an LLC Definition of a Managing Partner of an LLC If you want to start a business yet limit your liability for business debts, a good choice would be to form a limited liability company. An LLC functions as an entity separate from its owners. ... Featured Picks How to Buy an Existing Franchise How to Buy an Existing Franchise Entrepreneurs choose to buy an existing franchise for the advantages it offers over starting a new business. An existing franchise has name branding, a customer base and a proven strategy for earning ... How to Build a Stakeholder Base for Nonprofits How to Build a Stakeholder Base for Nonprofits A nonprofit organization relies heavily on the relationships it develops with the people and groups in its community. As you try to build a successful nonprofit, you must identify which elements in ... What Is an LLC Annual Report? What Is an LLC Annual Report? In many states, limited-liability companies (LLCs) are required...
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...CVP And Break-Even Analysis Paper CVP And Break-Even Analysis Paper Looking into opening a small business can be a daunting task but, with various opportunities for buying into a franchise, becoming a small business owner seems to be a reality for some. Each franchise provides various information pieces about their franchise to attract new owners. When someone is looking to invest in a franchise, doing your own analysis to validate the information provided by the franchise is critical in understanding whether or not the franchise is going to be as profitable as you would like. One such franchise is Snap fitness out of Minnesota and knowing the fixed cost of operating the franchise we can determine how many members are needed to break even. Also included is an analysis of achieving a $10,000 net income for a month of operations. To be a valid analysis we have included five examples of variable cost associated with a fitness center. Variable Cost As the owners of a new business, our ultimate goal is to make a profit. Profit can be measured in many ways and there are many complex techniques that can be used to calculate how much of a product or service must be sold to produce a profit. Cost Volume Profit analysis or CVP is one of the most useful ways for managers to understand the relationship between cost, volume, and profits and make competent management decisions. CVP analysis focuses on five areas: • Unit selling prices • Variable cost per unit ...
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...providing $20,000 capital investment and there will be an additional $30,000 raised in short-term loan. Non-Franchise Vs. Franchise When deciding on the business model we looked at the pros and cons of both the franchise vs. non-franchise method. Pros of the franchise model include the following: Franchising is a great way to find talented people to manage your locations and give them an incentive to work hard. The most qualified and hardest working people generally prefer to invest in running a business in return for profits rather than taking a salary as an employee. So by franchising, you are going to get better talent that will work harder to build the business than you would by hiring someone to work for you. Franchising is a good way to obtain expansion capital. Because your franchisees pay to buy outlets in your chain, you can grow the number of locations without tapping much of your own capital or needing to request financing from banks or investors. Franchising can generate high financial returns for relatively little risk. Unlike adding company-owned outlets, when you franchise, you put relatively little money into adding each location. If you have a good business model, you can earn high royalties from sales at those outlets. The percentage returns you earn can be many times what you would have earned if you opened and ran the outlets yourself. Cons of the franchise model include the following:...
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...with almost 10-25% of GDP in most OECD (Organization for Economic Co-operation and Development) countries .The industry is projected to provide almost 11 million employment opportunities by 2017.Retail, food and beverages, health and wellness, consumer services, and education are predicted to be the key sectors for franchise opportunities. While the organized retail segment in India is estimated to be worth $24 billion, only 2.5% of total retail sales are driven through franchise formats compared with nearly 50% in the US, indicating significant potential, the KPMG report said. “Franchising is critical for retailers to achieve exponential growth. Given the threat of mom-and-pop stores closing, both due to the changing external environment and the rising aspirations of the second generation, there is huge potential for franchise growth in the retail sector,” said associate director of management consulting at KPMG India. “What’s constraining growth right now is the fact that the business model hasn’t been standardized enough—not all business models balance profitability for both partners.” There are presently more than 3,000 brands in India that have adopted the franchise model. Several leading global companies already have an established presence in India. Recent...
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...Business Structure Types for Forming a Business Business Law/LAW 531 Business Structure Types for Forming a Business When I person decides to be an entrepreneur, choosing the type of business structure that would be right for the business they plan to open can be a daunting task. The reason is being is that there are many different types of business structures a person can choose from. Before making the decision on the type of business structure for the business, there are a few things that should be done before hand. The entrepreneur would first need to have a business plan that will guide them on how they would start the business and run it successfully. Next they should get any necessary assistance or training on how to go about forming a business. Once this has been done, a business structure can be determined after researching each type of structure to see which would fit their business idea the best. In the process of starting a business, choosing the type of legal business structure for a business will be one of the most important tasks a new entrepreneur will do. The reason is that whichever structure is chosen will have an impact on items like taxes the entrepreneur will pay, the amount of paperwork required for the business structure picked, the personal liability the business will have, and the ability to raise the money for the business structure picked. When going forward with the formation of the business, a person will have to know...
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...After the dotcom/internet bubble deflated, losses were continuing to mount. A change had to occur. The company’s CEO gave the managing director 9 months to start showing improvement. The only way to do this is by changing the operational structure of the company. A complete redirection in the operations philosophy was to franchise the operations. In order to help with this, it is recommended to use the company Ingram Micro to assist with this task. Ingram is the world’s largest B2B trade-only wholesale provider of technology products and services, including supply chain management. The total cost of a franchise will be £976 per store. This will reduce the cost of opening franchises and start increasing profit for the company. Issue identification The most important issue that easyinternetcafe currently experiencing is their operations. There is no organization on how the future internet cafes will open and be setup. There is an expectation of opening 208 locations in the next 3 years. The logistics of how this will occur must be defined and solved prior to the project moving forward. Other issues that the company is experiencing are: * Internet investment bubble burst in 2000 * Closing and downsizing of some of the original cafes * No operating plan for how to supply and open each new franchise * Large number of PC terminals at each store, increasing fixed cost base * Scalability of opening a large number of stores * High costs of setup...
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...and the operating system according to the terms and conditions mentioned in the franchise agreement. Both the franchisor and franchisee must fulfill their obligations under the contract. Before granting franchisee the right to use the name,logo and run the business, franchisee and also the franchisor must reach some requirements. It is same for Aarong. Aarong also has to consider the fact seriously. Before it starts signing agreements, it has to be confirmed both parties are meeting minimum requirements for the deal. Areas of requirements are mentioned bellow that can be used by Aarong to grant international franchise agreement. Information: We can also refer to term “knowledge about franchisor”. Franchisees must have researched on the background, mission, vision, goal and values of the parent organization. Franchisees are required to have primary understanding about business activity and operation procedure of the franchisor. Aarong is a brand with wide vision and clearer mission. Information about Aarong is available on internet. Any willing franchisor must agree with business philosophy and trade activities of Aarong. Also Aarong must have adequate knowledge about franchisees, target countries, locations, business profile of the would-be franchisee.. Legal Requirements: For example, in the United States of America, Standard Discloser document has to be issued by Aarong. UFOC or Uniform Franchise Offering Circular is the other name for the discloser. There are number of other...
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...prescribed period of time. The word "franchise" is of Anglo-French derivation—from franc, meaning free and is used both as a noun and as a (transitive) verb. For the franchiser, the franchise is an alternative to building "chain stores" to distribute goods that avoids the investments and liability of a chain. The franchisor's success depends on the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business. A franchise makes it possible for people who have never been in business before to run one successfully,” says Professor Lorelle Frazer, director of the Asia-Pacific Centre for Franchising Excellence at Griffith University. A major benefit of being part of a franchise is support. “When we compared independent and franchised businesses during the economic downturn we found that support made a difference to business survival,” says Frazer. “Group peer learning in properly facilitated education environments is one of the most powerful tools for franchise growth and profitability,” says Tony Arena, managing director of BCI Business Brokers. However the benefits of a franchise come at a price; some people choose an independent business for the simple reason that it can cost less to start up. But start an independent business and you’re effectively taking a gamble that there will be a market for a particular product or service. A franchisee can start out with both proof of concept...
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...Entrepreneurial Leadership What once began as a little family burger business in Northern Virginia in 1986 by Jerry and Janie Murrell and their and their five sons has grown into one of the world’s popular franchises. The decision to start the business was based on the ultimatum given to the four sons by their parents ‘start a business or go to college.” Their growth since opening has grown tremendously to where the family never expected it to grow, between the year they opened and 2002 which was the year they began franchising the family opened six locations all in the Washington, D.C. metro area. Many have wondered how has a mom and pop organization become so successful in such a short amount of time? What’s the magical secret? Other fast food chains have been around for years and have not risen to success in the short amount of time it took Five Guys to get where they are today. The difference between Five Guys and some of its competitors is the promise to only serve fresh food, nothing is ever frozen. What gives Five Guys the leg up from others in the industry is they do not have to keep remaking themselves, they keep it simple by having the same menu today that they had in 1986 (Kulikowski, 2011). According to Jerry Murrell, the family stuck to their guns and decided to never stray from their original plan, which was to only offer burger and fries, fresh ingredients – never frozen, never have a delivery service, and focus on what’s in front of them which are the...
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...Franchising and Franchise relationship Introduction Various researchers that have developed models for examining businesses over years assume that companies should pass through four stages during their life cycle: start-up, growth, maturity and decline. The most critical of all are the start-up and growth stages. In the first stage the business makes its primary steps in attempt to create a market presence, the primary base of customers. The start-up stage is generally characterized by innovation, high risk, and low profit margins. Stage two or the growth phase of the business is when the business establishes its niche in the market. This is the phase where the business owners start to establish their brand identity and generate brand loyalty within their customer base using sound marketing practices. Although the focus of this stage is to maintain the core customer group and build trust and goodwill among the customers, this stage is marked by a rise in consumer demand and a consequent requirement of increased inputs in terms of production, manufacturing, and general operations to keep up with the rising sales and continue growth. The growth phase is thus marked by increased sales, rise in profit margins and thus establishment of the brand name in the market. Once you have given consideration to expanding, the next step is determining the best method to grow your business. The business has many strategies available. The company can choose to go along with...
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...to sell his Singer sewing machines through franchised outlets. Retail outlets dominate franchising, but increasing demand for consumer and business services is producing a boom among service-oriented franchises. The Franchising Boom! Franchising has experienced exponential growth rates in the United States and abroad and its growth in recent years is phenomenal. Franchising is a major reason for U.S. business growth and dominates industries such as lodging, real estate brokerage, quick-serve restaurants and convenience stores and is become increasing poplar in other industries Global Franchising Franchises account for more than 50 percent of all retail sales, totaling more than $1.4 trillion. More than half of U.S.-based franchise companies support international operations and 30 percent of their franchise units are located on foreign countries. The markets to watch include Europe and Pacific Rim countries. WHAT IS A FRANCHISE? Franchising - Defined Franchising describes a semi-independent business owners that pay fees and royalties to a parent company in exchange for the right to sell its product and services under the franchiseer’s trade name and often to use its business formant and system. Franchisees buy a “success package” from the franchisor that shows them how to use it. Franchisees, unlike independent business owners, do not have the freedom to change the way they run their businesses. Successful franchisors claim that neglecting to follow the formula is one...
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