Professional Documents
Culture Documents
Venture
Opportunities
Franchising
Opportunities
Franchise Franchise
Parties Facilitators
Fig. 6-1
Copyright © by South-Western College Publishing. All rights reserved. 6–7
The Pros and Cons of Franchising
• Advantages • Limitations
– Probability of success – Franchise costs
Proven line of Initial franchise fee
business Investment costs
Pre-qualification of Royalty payments
franchisee Advertising costs
– Training – Restrictions on
Franchisor-provided Business Operations
– Financial assistance – Loss of independence
Franchisor
assistance
– Operating benefits
Franchisor-aided
Copyright © by South-Western College Publishing. All rights reserved. 6–8
Franchisor Controls on Franchisees
• Restricting of sales territory
• Requiring site approval and imposing
requirement on the outlet’s appearance
• Restricting the goods/
services that can be sold
• Requiring specific
operating hours
• Controlling advertising
Pluses Minuses
Formalized training Franchise fees
Fig. 6-2
Copyright © by South-Western College Publishing. All rights reserved. 6–10
Evaluating Franchise Opportunities
• Locating a Franchise Opportunity
• Investigating the Potential Franchise
– Information sources
Independent, third-party sources
Franchisors themselves
Existing and previous franchisees
• Benefits • Drawbacks
– Reduction of capital – Reduction in control
requirements – Sharing of profits
– Increase in – Increase in
management operational support
motivation costs
– Speed of expansion
Fig. 6-3
Copyright © by South-Western College Publishing. All rights reserved. 6–14