Franchising is a legal agreement that allows a franchisee to use a product, service, or method of the franchisor in exhange for fees and royalties.
A franchisee is an independent businessperson who agrees to operate under the policies and procedures set up by the franchisor.
Articulate the difference between product-distribution franchises and business-format franchises
Product-distribution franchises allow the franchisee to purchase the right to use the trade name of the manufacturer and to buy or sell the manufacturer's products.
Business-format franchises allow the franchisee to duplicate the franchisor's way of doing business
Compare the advantages and disadvantages of franchising
There are eight major advantages of franchising from the franchisee's perspective:
Proven product or service
Marketing expertise
Financial assistance
Technical and managerial assistance
Opportunity to learn
Quality control standards
Efficiency
Opportunity for growth
The primary disadvantages to the franchisee include fees, restrictions on his freedom to operate the business.
Explain how to evaluate a potential franchise
To evaluate a franchise opportunity, you should send for a copy of the company's disclosure statement, research the company through business periodicals, talk to current and former franchisees, and check out the franchisor's reputation with the international franchise association.
My View: Franchising looks attractive to extend a successful brand, but we should beware the high costs and business challenges.
No comments:
Post a Comment