FRANCHISE MANAGEMENT

Franchising A marketing system revolving around a two-party agreement, whereby the franchisee conducts business according to the terms specified by the franchisor Franchisee An entrepreneur whose power is limited by a contractual agreement with a franchisor Franchisor The party in the franchise contract that specifies the methods to be followed and the terms to be met by the other party

FRANCHISE

THREE KINDS OF FRANCHISES

Trade Name Franchise Grants the right to use a widely recognized name within a particular 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 specified territory
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

How to acquire franchise

1. DECIDING WHAT FRANCHISE YOU CAN AFFORD
2. STEPS AFTER CHOOSING FRANCHISE 3. HIRING FRANCHISE ATTORNEY 4. PREPARING YOUR BUSINESS PLAN

Costs of franchisee
1 FRANCHISE FEE 2 LEGAL FEES 3 BUILD OUT COSTS 4 SUPPLIERS 5 WORKING CAPITAL

Merits of franchise
Turnkey System: if your skill are weak in sales and marketing then turnkey System is best. . Franchise Support: Buying a franchise offers the opportunity to share your challenges 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 group allows for lower costs in purchasing inventory and equipment. Easier Staff Recruiting: A franchise business with a recognized name will have greater recruiting pull than an unknown business entity.

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 many potential 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

On side of franchisor.
PROS Capitalized Expansion Continuing Revenue Streams Brand Development CONS Legal Regulation Investment

On side of franchisees
PROS Established Brand Established Business Systems Training and Support CONS Benefits Could Prove Illusory Low revenues

ROYALTY
The regular monthly income that the franchisor earns is based on royalty payments from each franchisee. These payments are collected to pay expenses that are incurred at the franchisor's headquarters such as rent, utilities, and employee compensation. The most frequent type of format is having the fee calculated on about 5-8 percent of the total gross sales that the franchisee earns.

STEPS FOR SUCCESSFUL FRANCHISE

1 GETTING STARTED 2 UPGRADING FROM BRAND TO CORPORATE 3 BUILDING WORD CLASS ORGANISATION

TOP 20 FRANCHISE
1. 2. 3. Subway Submarine sandwiches & salads $84,300 - $258,300 McDonalds Hamburgers, chicken, salads $1,057,200 - $1,885,000 7-Eleven, Inc Convenience stores $775,300 $40,500 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Jan-Pro Commercial cleaning $3,300 - $54,300 Kumon Math Supplemental education $36,538 - $145,250 Stratus Building Commercial cleaning $3,450 - $57,750 Miracle-Ear Hearing instruments $122,500 - $570,000 Pizza Hut Inc Pizza, pasta, wings $302,000 - $2,100,000 Hardees Burgers, chicken, biscuits $1,182,000 - $1,583,500 Dennys Inc Full-service restaurant $1,200,000 - $2,600,000 Jazzercise Inc Dance/fitness classes $2,980 - $38,400 Matco Tools Mechanics Tools & Equip $79,926 - $188,556 UPS Store Postal/Business Services $150,980 - $337,950

4.
5. 6. 7. 8. 9. 10.

Hampton Inn/Suites Hotels $13,148,800

Supercuts Hair Salons

$3,716,000 -

$112,600 - $243,200

H & R Block Tax preparation & filing $34,438 - $110,033 Duncan Donuts Coffee, doughnuts, etc $537,750 - $1,765,300 Jani-King Commercial cleaning $13,200 $93,200 Servpro Disaster restoration & cleaning $127,300 - $174,700 AmPm Mini Market Gas/Store $7,615,065 $1,835,823 -

BIBLIOGRAPHY
1 franchise.about.com 2 franchisedirect.com 3 franchiseesentials.com 4 franchiselawsolutions.com

PRESENTED BY
41 DHARIT MEHTA 43 PARSHVA SHAH 3 HARSHIL KAPADIA 4 MAYANK 01 AKSHAT AGARWAL 20 JEET HARIA