1. 1 SMALL BUSINESS MANAGEMENT Chapter Six Franchising

2. 2 History and Background of Franchising

3. 3 What is Franchising? u Manufacturer Directed Franchise u Wholesaler-Retailer-Directed Franchise u Franchising Company

4. 4 Advantages of Franchising u Proven Market fort he Product or Service u Services the Franchisor may provide. –1. Selection of Location –2. Purchase or Construction of Site, Buildings, and Equipment –3. Provision of Financing

5. 5 Advantages of Franchising u Services …. –4. Standardized Methods of Operating –5. Advertising –6. Purchasing Advantages –7. Training

6. 6 Potential Disadvantages of Franchising u Lack of Independence u Cost of the Franchise u Unfulfilled Promises u Restrictions of the Contract –Product or Service Offered –Line Forcing –Termination

7. 7 Potential Disadvantages of Franchising u Saturation of the Market u Lack of Security u Cost of Merchandise u Effectiveness of Promotion u Exaggeration of Financial Success

8. 8 Evaluation of a Franchise Opportunity u Franchisor u Industry Associations u Professionals u Other Franchisees u Government Agencies

9. 9 The Entrepreneur as Franchisor u What Businesses can be Franchised?

10. 10 The Entrepreneur as Franchisor u How does one become a Franchisor? –1. Establish a Prototype –2. Prepare the necessary Information. –3. Investigate the Legal Requirements –4. Develop a Planed and Standardized Program of Operations –5. Obtain Adequate Financing

11. 11 Franchising in the Future

12. 12 Appendices u A. A Sampling of Franchises Operating in Canada u B. Trade Associations that Assist Franchisees and Franchisors u C. A Checklist for the Potential Franchisee; Questions to Answer before Going into Franchising u D. Franchise Contract Clauses

13. 13 Concept Checks u 1. Why is franchising enjoying such rapid growth in the Canadian economy? u 2. What are the three general categories of franchises? u 3. What are the potential advantages of franchising?

14. 14 Concept Checks u 4. What are the potential disadvantages of franchising? u 5. When investigating purchasing a franchise what sources of information are available to assist in making the decision? u 6. What steps are involved in becoming a successful franchisor?