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LECTURE 3 - RECOGNIZING FRANCHISING OPPORTUNITIES, Prepared by Group 8 -…
LECTURE 3 -
RECOGNIZING FRANCHISING
OPPORTUNITIES
Sources of Funding to Franchise Business
Asser-based loan
Crowdfunding
Cash
Bank overdraft
Leasing
Criteria of Franchising
relatively recession resistant industry
stable growth sector
an easily taught model
high profit margins
ability to invest financially and personal time
Advantages of Franchising
Franchisee
Some of the major banks offer competitive rates for lending to frnachisees
A degree of independence that you might not achieve as an employee
A successful franchise means that the business model is proven
Operating under an established brand with a strong reputation make profile raising easier
Franchisor
Fully committed due to the investment they put
This commitment demonstrate by the franchisee to bring the business successful by bringing stability and advantages to the business.
Consistent operations across the business
it improved efficiency and higher quality levels
franchisees may be more talented
they turning a profit than employees would be
Expansion can be faster
Franchisee provide the labour and their sales provide the growth
Franchising basics
franchise model enabled companies to expand quickly and efficiently
minimising financial risk for the original business and giving
entrepreneurs a clear path to success
setup franchise involves - time, effort & financial investment
Disadvantages of Franchising
Franchisor
Sharing confidential information to franchisee is risky if they not fully committed
Selecting one wrong franchisee can ruin the reputation of the whole franchise
Franchisees cannot manage as closely as employees becuof different goals with franchisor
Franchise recruitment can be slower and less efficient than employee recruitment
Franchisee
Profit margin can be hampered by franchise feed and levies
Initial franchise cost can be very high and take two or more years to turn a profit
Having to comply with the franchise agreement can restrict growth in some areas
Franchise fees and royalties can be a major expenses
Franchisor's Main Role
to make sure the model, system & processes can be successfully replicated by others
to find capable, qualified & committed franchisees
ensuring the franchise's standards & value maintained across all franchised branches
to provide the franchisees with on going training
to ensure franchisees understand their role & have the support they need to their customers
ensure consistent marketing & advertising campaigns & helps the franchise to create a unified & brand identity
Issues Between Franchisor - Franchisee
lack of communication
Costs on royalties
Misalignment on technology
Franchisees not meeting corporate standard
Prepared by Group 8