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.
All the services that need to be provided are being provided by the owners company and has no need to set up a joint venture • Franchise Franchises are a very important part of the business world. When traveling from city to city we look for places like Tim Hortons or Boston Pizza. These are businesses that we are familiar with and trust the services that we receive. People thinking of opening a franchise joint has to pay a franchise cost to the owners. But this gives them the chance to run a business that is already familiar to people, instead of starting a business from scratch.
The franchisor will not pay the manager and employees as the franchisee has already included them in his or her payroll. With franchising, the franchisor will have talented and motivated people to manage the business in different locations. This will provide the recommended expertise in running the business. This will therefore provides numerous advantages being offered by the economies of scale. Economies of scale will work to the advantage of the franchisor.
3.4.2.2. Franchising Franchising is “an organizational agreement form based on a legal agreement between a parent organization (the franchisor) and a local partner (the franchisee) to sell a product or service using a brand name and process that have been developed and are owned by the franchisor” (Alexander & Doherty, 2009; p.260). The franchise agreement is inclined to be more complete than a licensing agreement, where the franchise has consent to a total operation being prescribed (Chee & Harris, 1998, p. 310). According to Hollensen (2007), there are number of factors that have contributions to the rapid growth rate of franchising. The two dominant factors are following; The general worldwide decline of traditional manufacturing industry
This paper summarizes prior research regarding franchising in the banking sector, the level of risk in the business approach of bank managers and the role of the agency theory in this sector. High-value-franchises tend to use a less risky business approach than low-value-franchises because franchisors prefer less risk when having a high-value-franchise. The incentives of franchisees and franchisors thereby need to be aligned to lead to higher company profits. Intro It is evident that the banking sector goes paired with risk-taking decisions and going through risk involving processes (Demsetz, Saidenberg and Strahan, 1996). Risk-taking, however, does not go paired with having a franchise that is considered as a franchise with high value.
In fact, licensing and franchising has a similarity, which is both of them offer company to earn monthly profits but obviously it still depended on how you managed and operated your business (Gerhardt, S, Hazen, S, Lewis, S & Hall, R 2015, p. 8). Licensing is like giving the rights to someone to produce a product or using its brand name, however, franchising is like open a branch by using its brand name or business model (William, C 2014). Actually the business which operated by licensing method usually can consider as a cheaper choice than the franchising business (Gerhardt, S, Hazen, S, Lewis, S & Hall, R 2015, p. 8). So the advantage of licensing obviously is the less production cost. For example, However, the disadvantage by using licensing method to operate a business is the licensor may lose their power to control what and how their licensee doing their business in different countries (William, C 2014).
Independent business owners do not need to enter into contractual obligations with the franchisee and not the terms of the law set by the business owner before. As a business owner, you are your own boss. You take all the decisions. You set your own hours and work independently. Depending on the type of business you could work anywhere.You can use as owner, principal, or the president on your resume.
General Survey There are a lot of advantages in setting up a joint venture yet there are a lot of disadvantages present. There are a lot of factors needs to be considered before setting up a joint venture. The Financial Strength, Management Style, Market and technology are one of the major factors that are need to be taken into consideration. The two companies which are in partnership should have a lot of common features in them in order to establish a successful joint venture in a particular field. Strong leadership principles are to be inherited in a joint venture if they are looking to become a strong force in the market.
Keeping in view the circumstances, situations and the inherent variables try to evaluate as to whether franchising will benefit you as a product. Will franchise help attain financial prosperity? Will it help you to attain a heightened recognition (brand identity)? If these basic questions have affirmative answers one should ponder deeper into the subject. • Step – 5 Engage a consultant to conduct a feasibility study and market survey – In order to rule out any chances of emotional tilt in your consideration it becomes essential to have a factual certification of your intent.
Management of franchise/ joint venture 3. Low differentiations that mean the product are same. Opportunities: 1. Low cost menu is liked by large number of customers; don’t want to use their money only for food so they will choose this company. 2.