The main purpose of this report is to introduce the definition of franchise and to analysis the advantages of it. The report comprises several advantages of franchise in almost every aspect, which have been proved to be essential and reliable. By this mean, the conclusion could be drawn that it is the best way to run an international business by franchise. 2. 0Introduction Franchise, is an authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities.
For example, McDonald’s is one of the most famous brand franchising.
As the franchisor, McDonald’s gives the right to the franchisee, as well as sell McDonald’s related products to someone who is willing to set up his own business. The license agreement demands McDonald’s to persist in manufacturing or operating ways and the quality of the good. This is a settlement that can suit both parties pretty well. Under a McDonald’s franchise, McDonald’s owns or rents the position and the building of restaurant.
The franchisee buys the parts, the equipment and the right to manage the franchise in next twenty years.
To confirm coherence throughout the world, all franchisees must use standardized McDonald’s menus, branding, administration systems and design layouts. 3. 0Main Section 3. 1 Justify of the reference Bernd Helmig is Full Professor, Chair and Head of Department for Business Administration, Public & Nonprofit Management at the University of Mannheim (Germany). Besides he acts as Academic Director for Executive Education of Mannheim Business School.
He was Visiting Faculty Guest at Harvard Business School (Boston, Cambridge/Mass. ), and Visiting Scholar at the University of Edinburgh (UK).
His research interests cover fields such as Nonprofit Marketing, Fundraising, Social Marketing, Failure of NPOs, and Corporate Social Responsibility (including Corporate Giving and Corporate Volunteering). Tansev Geylani graduated from University of Pittsburgh. He has such degrees as PhD in Industrial Administration (Marketing), Carnegie Mellon University, 2004,MS in Industrial Administration (Marketing), Carnegie Mellon University, 2002 MBA, Koc University and 1999 BS in Mechanical Engineering, M. E. T. U. , 1997. Tansev Geylani joined the Katz faculty in 2004.
His research interests include distribution channels, retailing, product line strategies, information sharing, marketing & antitrust, media competition, and user-generated content. He was named Marketing Science Institute Young Scholar in 2009. Other awards he received include Management Science’s Distinguished Service (2009 ; 2011) and Meritorious Service awards (2012), the Katz Excellence in Research Award (2009), and the Katz Excellence in Teaching Award (2008). Alanson Minkler work as an Associate Professor, Economics for University of Connecticut at Storrs Mansfield.
His subject areas include: Economic Rights, Alternative Economic Decision-Making. He also has degree like Ph. D. University of California-Davis, 1988 and B. A. University of California-Berkeley, 1981. His initial interests centered on worker contributions and motivations in firms, with particular focus on labor-managed and franchised firms 3. 2 Advantages of Franchise Being your own boss The franchisor regularly checks the standards of service, quality, value and cleanliness of the franchisee (Minkler, A. , 1990).
The franchisee who gets all the training and support from franchisor is operating his or her own business so has much to lose as well as gain, which motivates them a lot to determine to succeed. Lower failure rate Once you use a franchise, you are buying a developed concept that has been successful. Figures show that franchisees stand a much better opportunity of success than people who start independent businesses; independent businesses count a 70 to 80 percent chance of NOT surviving the first few critical years while franchisees have an 80 percent chance of surviving (Michael M.
Coltman, Franchising in Canada: Pros and Cons, Self-Counsel Press). Intensive initial training The franchisor has the duty to offer full-time training program which includes three stages to franchisee (Tansev G, 2004). Firstly, it starts with working in a restaurant, wearing the staff uniform, preparing for food and cooking. Secondly, it focuses on areas such as team building, business management, handling customer enquiries and leadership skills.
Lastly, the trainee learns about stock control and ordering, legal side of hiring and employing staff and profit and loss accounts. These training methods are proved to be absolutely essential. Marketing help Franchisee could benefit from the parent company’s marketing programs, according to Entrepreneur. com. The marketing and advertising advertisements created by the franchisor leave franchisee with more time to focus on the daily operating of business. This is a win-win for both parties. It helps increase sales by means of franchise, which, on the other hand, allows the parent company to collect more fees. (Bernd H. 2008) Continuous support
It recognizes that the success and profitability of many international chain brands are inextricably linked to the success of the franchises (Minkler, A. , 1990). A highly qualified group of professional advisers offer continuous support on everything from human resources to computers and accounting. The field adviser can become a valuable business partner and a sounding board for ideas. Guaranteed Territory In most cases, a franchise parent company would guarantee franchisee a predetermined territory and assist it in succeeding in that field (Tansev G, 2004).
Territories vary depending on the company which is worked with, but not having to compete with another franchise location from the same company in territory can help to generate revenue. 3. 3 Shortages of Franchise One major problem for a new business is predicting how much business it might enjoy, running the risk of either cashflow problems or the difficulties associated with overtrading. The turnover and profit from any outlet will vary, depending on a wide range of internal and external variables.
Each franchisee is expected to take a positive approach to building up sales, although an average rate of return of over 20 percent is generally expected over the lifetime of the franchise. When it comes to starting a business, many people think of buying a franchise as a shortcut to success (Bernd H. 2008). While there is some truth to this, not all franchises are created equal, and not everyone is cut out to be a franchisee. 4Conclusion By specific descriptions of many advantages of franchise and comparison them with its drawbacks, we can make the conclusion that franchise is the best way of international business.
👋 Hi! I’m your smart assistant Amy!
Don’t know where to start? Type your requirements and I’ll connect you to an academic expert within 3 minutes.get help with your assignment