Transcript Slide 1

Franchising
Small-time investor’s chance
to strike it rich
Franchising
Franchising
Allows for a company to expand rapidly
Uses other peoples money (franchisee)
Examples:
•Bojangle’s
•Hooters
•Brinker International
Franchising
Franchisor
 Owner of the trademark, process, operating
procedures, blueprints
 Maintains standards of franchisee
 Dictates provisions of contract
•Responsible use of name
•Net worth of primary stockholders
•Franchise's market area
•Provide incentives for growth
 Concurrently, Franchisor can operate their own
units
Franchising
Benefits for the Franchisor
Increased market share
Increased stream of revenue
Up-front fees
Maintain control of key elements of operation
Operate wholly-own operations in key markets
Franchising
Drawbacks for Franchisor
 Careful consideration of the franchisee selection
 Difficulty in maintaining standards
 As franchisee base increases there is a loss of
decision making control
 Increased liability
 Mandatory disclosure of business principals
Franchising
Franchisee
 Contracts with Franchisor
 Agrees with the provisions of contract
 Accepts conditions and blueprints of the
franchiser organization
 Opportunity to build a large portfolio of
franchised locations
Franchising
Benefits for Franchisee
 Set of plans and specifications for building –
shortened start-up
 Branded Trademarks and Trade Dress
 Proven methods of operation
 National advertising
 Participation in volume purchasing discounts
 Access to capital
Franchising
Disadvantage for the Franchisee
Lack of operational power; must conform
Large fees
Must meet standards as set by franchisor
Often franchise is non-transferable
No control over brand name ownership
Franchising
Franchise Examples
Franchisors:
Yum Brands
Subway
Quiznos’ Subs
Franchisee’s:
Applecore Enterprises
Franchising