Business Format Franchising Case Study

According to Gillis and Castrogiovanni (2012, p.75), franchising is a business relationship grounded in authorizing agreement between two self-governing organizations. They argue that, despite the fact that franchising has two primary forms including product distribution and business format franchising, it is business format franchising that is the dominant form of franchising researched for a good number of years (Wright, 2001, p.115). Therefore, business format franchising refers to a continuing association between two parties that offer a full set of services and in which one party, the franchisee, sells goods or services provided by or sanctioned by the other party, the franchisor. Additionally, Gillis and Castrogiovanni (2012, p.76) demonstrated

For instance, in order to attain a financial return, the franchising corporation, the franchisor, grants a certificate to its franchisees, permitting them to make use of a complete business array. This involves teaching, funding and the corporate title, therefore enabling them to cope with their own dealings to exactly similar standards and formats as the other units in the franchised sequence. Indeed, this statement is correct because franchising is meant to help entrepreneurs grow and develop themselves greatly. However, it is important to note that for all these to be achieved, the two parties, franchisor and franchisee have different responsibilities they must accomplish in order for the arrangement to function. Just as it is noted in the article, franchisors have a contractual or at least an implied responsibility to maintain their system`s brand appearance and standing through marketing and promotion, and through the control of other participants in the franchise system. On the other hand, the franchisee is expected to pay a subscription for the attainment of the franchise and the ongoing service. In accordance, he or she will also be expected to uphold the values of the franchise as provided by the franchisor in the franchise agreement. The statement in this article is true because for any arrangement to be

Therefore, it is the same story with franchising as a model for entrepreneurial growth; there are various benefits from this process for both the franchisee and the franchisor. For instance, on the part of the franchisor these typically involve the capability to expand the business speedily and the increasing of expenses and perils across the system. On the other hand, for prospective franchisees the attractiveness of opening a franchise system involves primarily the opportunity to buy a business with a proven approach for fruitful operation. Studies reveal that the United States of America has traditionally been the world`s only biggest franchise market. However, it is should be noted that currently, franchising is being employed by companies as a strategy for growth in both developed and emerging markets. Arguable, the majority of research into franchising has centered mainly on domestic franchising practice and it has achieved this primarily with reference to the United States market. This article has concentrated primarily on the production sector, putting little attention on other service sectors. In real sense, this should not be the case because franchising as a strategy for entrepreneurial growth is spreading very fast and every corporation whether big or small are putting it into consideration in their operations. Therefore, it should be noted that a corporation`s