Franchise Management (1)
Transcript of Franchise Management (1)
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FRANCHISE
MANAGEMENT
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FRANCHISE
FranchisingA marketing system revolving around a two-partyagreement, whereby the franchisee conducts businessaccording to the terms specified by the franchisor
FranchiseeAn entrepreneur whose power is limited bya contractual agreement with a franchisor
FranchisorThe party in the franchise contract that specifies themethods to be followed and the terms to be met by
the
other party
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THREE KINDS OFFRANCHISES
Trade Name Franchise
Grants the right to use a widely recognized name within aparticular territory True Value Hardware, Associated Grocers Inc (AGI), Century 21
Product Distribution Franchise (Dealership)
Allows you to sell a specific, brand-name product in a specifiedterritory Snap-On Tools, Toyota
Business Format Franchise Provides an entire business plan, marketing, and operating
system
Guidance from the franchisor is ongoing; supervision &monitoring are continuous Subway, McDonalds
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How to acquire
franchise1. DECIDING WHAT FRANCHISE YOU CAN AFFORD
2. STEPS AFTER CHOOSING FRANCHISE
3. HIRING FRANCHISE ATTORNEY
4. PREPARING YOUR BUSINESS PLAN
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Costs of franchisee
1 FRANCHISE FEE
2 LEGAL FEES
3 BUILD OUT COSTS
4 SUPPLIERS
5 WORKING CAPITAL
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Merits of franchise
Turnkey System: if your skill are weak in sales and marketing then turnkeySystem is best..Franchise Support: Buying a franchise offers the opportunity to share yourchallenges with other like-minded entrepreneurs
Brand Name: The more established franchises provide a market awareness& brand name to franchisees
.Lower Inventory Prices:The collective buying power of a franchise groupallows for lower costs in purchasing inventory and equipment.
Easier Staff Recruiting: A franchise business with a recognized name willhave greater recruiting pull than an unknown business entity.
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Demerits of franchise
Less Freedom:Franchisees are required to share financial information and conform to uniform
operating procedures
Higher Start-Up Costs:Buying a brand name franchise is often beyond the financial capability of manypotential business owners
Broken Promises:The franchiser may not have the ability to provide market or field support. Owners can become reactive and expect the head office to solve all the problems. In your own business, the only person you count on is you
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On side of franchisor.
PROS
Capitalized ExpansionContinuing Revenue
Streams
Brand Development
CONS
Legal Regulation Investment
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On side of franchisees
PROS
Established Brand Established Business
Systems
Training and Support
CONS
Benefits Could ProveIllusory
Low revenues
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ROYALTY
The regular monthly income that the franchisor earns is based on royaltypayments from each franchisee.
These payments are collected to pay expenses that are incurred at the franchisor'sheadquarters such as rent, utilities, and employee compensation.
The most frequent type of format is having the fee calculated on about5-8 percent of the total gross sales that the franchisee earns.
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STEPS FOR SUCCESSFUL
FRANCHISE
1 GETTING STARTED
2 UPGRADING FROM BRAND TO CORPORATE
3 BUILDING WORD CLASS ORGANISATION
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TOP 20 FRANCHISE
1. Subway Submarine sandwiches & salads$84,300 - $258,300
2. McDonalds Hamburgers, chicken, salads$1,057,200 - $1,885,000
3. 7-Eleven, Inc Convenience stores $40,500 -$775,300
4. Hampton Inn/Suites Hotels $3,716,000 -$13,148,800
5. Supercuts Hair Salons $112,600 - $243,200
6. H & R Block Tax preparation & filing$34,438 - $110,033
7. Duncan Donuts Coffee, doughnuts, etc$537,750 - $1,765,300
8. Jani-King Commercial cleaning $13,200 -$93,200
9. Servpro Disaster restoration & cleaning$127,300 - $174,700
10. AmPm Mini Market Gas/Store $1,835,823 -
$7,615,065
11. Jan-Pro Commercial cleaning$3,300 - $54,300
12. Kumon Math Supplementaleducation $36,538 - $145,250
13. Stratus Building Commercialcleaning $3,450 - $57,750
14. Miracle-Ear Hearing instruments$122,500 - $570,000
15. Pizza Hut Inc Pizza, pasta, wings$302,000 - $2,100,000
16. Hardees Burgers, chicken, biscuits$1,182,000 - $1,583,500
17. Dennys Inc Full-service restaurant$1,200,000 - $2,600,000
18. Jazzercise Inc Dance/fitness classes$2,980 - $38,400
19. Matco Tools Mechanics Tools &Equip $79,926 - $188,556
20. UPS Store Postal/Business Services$150,980 - $337,950
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BIBLIOGRAPHY
1 franchise.about.com
2 franchisedirect.com
3 franchiseesentials.com
4 franchiselawsolutions.com
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PRESENTED BY
41 DHARIT MEHTA43 PARSHVA SHAH3 HARSHIL KAPADIA4 MAYANK01 AKSHAT AGARWAL20 JEET HARIA