FRANCHISING Danielle Keusch

WHAT IS A FRANCHISE?  “ The right to use a specific business’s name and sell its products or services in a given territory” (Nickels pg. 136)  Combines aspects of working for yourself and working for a high power Understanding Business

FRANCHISOR VS FRANCHISEE  Franchisor: A company that develops a product concept and sells others the right to make and sell the products.  Franchisee: A person who buys a franchise and owns that company under a franchisor.

FRANCHISE AGREEMENT  Franchise Agreement: "An arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory.” (Nickels pg. 136)

BRAND  Multi-brand: These franchisees operate different brands under a single organization, creating efficiencies, economies of scale, and market penetration to increase sales and profitability.  Co-branding: Franchisee operates two brands from the same location ("The Basics of Franchising.“)

TRADE NAME FRANCHISING  Trade name franchising: Franchisee purchases the right to become identified with the franchisers trade name without distributing particular products exclusively under the manufacturers name  Most common with food and beverage companies in which they can sell the syrup concentrate to bottling companies then they can making and sell the final product. (McDonnell McPhee and Associates)

PRODUCT FRANCHISING  Product: Licenses the franchisee to sell specific products under the manufacturer’s brand name and trademark through a selective, limited distribution network  In order to get these rights the store owners must pay fees or buy a minimum amount of products. (McDonnell McPhee and Associates)

PURE FRANCHISING  Pure: Provides the franchisee with a complete business format, including a license for a trade name, the products or services to be sold, the physical plant, the methods of operation, a marketing strategy plan, a quality control process, a two-day communications system, and the necessary business services.  These are the most common since the franchisor company usually helps with launching and running the new business. In return the store owner pays fee and royalties. (McDonnell McPhee and Associates)

ADVANTAGES  Already has an established product and easier to start up business  Provides intense training to new franchisees  Your business and your profits  Already a nationally recognized name  Available assistance from experts  Low failure rate (Nickels pg. 137)

DISADVANTAGES  High fees for the rights to own a franchise  Franchisor often demands a large share of profits with large startup costs  Lots of rules and regulations that make owners lose their drive to run a business  Coattail effect: Other franchises impact the future and profitability of your business  Must meet certain standards  Face restrictions on the resale of their franchise (Nickels pg. 137)

HOME-BASED  A franchise based in the owners home  Advantages: Less stress of commuting Extra time for family Low overhead expenses-started as little as 5,000 dollars  Disadvantages Being isolated Long hours Must be motivated and organized (Nickels pg. 141)

WOMEN IN FRANCHISING  Although women have grown to own many United States companies, they lack in franchise ownerships compared to their male counterparts.  Many women are co-owners with male and female partners  Women are now selling their companies to franchisees  Ownership has grown from 18% to 21% (Nickels pg. 140)

GLOBAL MARKET  Franchises have grown and are now across the world  Canada is the most popular target for U.S. based franchises  Even small business are spreading and finding profits in other countries  Franchises are successful due to convenience and predictable level of service and quality  Difficulty arises when crossing language barriers and all companies must do their research (Nickels pg. 142)

TECHNOLOGY  Virtual and online business have created new opportunities for franchises.  Virtual stores increase value to customers  Franchisees need to ensure their personal website match up with the franchisors websites to avoid conflict  Social media is essential for spreading messages and perfect advertising to the younger crowds  Chat rooms, and Skype are important for communication and working well with other franchises in locations across the world. (Nickels pg. 141)

WELL KNOW FRANCHISES  Subways  Quiznos  UPS  Cold Stone Creamery  Dairy Queen  Dunkin Donuts  Days Inn

MCDONALDS: BIGGEST FRANCHISE  Liquid capital required: $500,000 Franchise fees: $45,000  Investment: $1,100,000-1,900,000 Royalty: 12%  More than 80% of their restaurants are owned and operated by their franchisees  Found in 118 countries and territories  Operates 35,000 restaurants worldwide and employs 1.7 million people "We've Helped 6,089 People This Week Find a Franchise."

WORKS CITED  Nickels, William G., James M. McHugh, and Susan M. McHugh.Understanding Business. New York: McGraw-Hill Education, Print.  McDonnell McPhee and Associates - Franchise and Retail Consulting in Melbourne, Australia - 3 Basic Types of a Franchise." McDonnell McPhee and Associates - Franchise and Retail Consulting in Melbourne, Australia - 3 Basic Types of a Franchise. N.p., n.d. Web. 28 Apr  "The Basics of Franchising." Franchising.com. N.p., n.d. Web. 06 Mar. 201  "We've Helped 6,089 People This Week Find a Franchise." FranchiseHelp: Find Popular Franchise Options. N.p., n.d. Web. 28 Apr. 2016