Entrepreneurship MGT602

Theme 04: Routes to Entrepreneurship: Franchising

Videos 35-41

1
 Franchising
Definition
A marketing system revolving around a two-party agreement, whereby the franchisee conducts business
according to the terms specified by the franchisor.
Franchisor
The party in the franchise contract that specifies the methods to be followed and the terms to be met by the other party.
Franchisee
An entrepreneur whose power is limited by a contractual agreement with a franchisor.
Alternative Franchising Systems
System A System B System C
Franchisor is a Franchisor is a Franchisor is a
producer/creator. wholesaler. producer/creator.

Franchisee is a Franchisee is a Franchisee is a

wholesaler, such as retail establishment, retail establishment,
a soft-drink bottler. such as a such as a fast-food
hardware store. restaurant.

Entrepreneurship MGT602 2
Theme 04 Video 35 Franchising Opportunities - Introduction
 Pluses and Minuses of Franchising

Entrepreneurship MGT602 3
01 Video 36 Pluses and Minuses of Franchising
Theme 04
 Franchising Options

Entrepreneurship MGT602 4
Theme 04
01 Video 37 Franchising Options
 The Structure of Franchising

Entrepreneurship MGT602 5
Theme 04 Video 37 Franchising Options
 Typical Franchising Costs
Evaluating Franchise Opportunities
§ Initial Franchise Fee § Selecting a Franchise Opportunity
§ Cash Investments § Personal observation
§ Royalty Payments § Advertisements
§ Advertising Expenses § Existing and previous franchisees

Typical Franchising Controls

§ Restriction Sales Territory § Information sources

§ Approval of cite and facility’s appearance § Independent, third-party sources

§ Restrictions of goods and services to be sold

§ Required operating hours and advertising

Entrepreneurship MGT602 6
Theme 04 Video 38 Franchising Cost, Video 39 Franchising Controls, Video 40 Franchising Opportunities
 Key elements of Franchiser - Franchisee Relationship
§ Responsiveness
§ Empathy
§ Communication
§ Dependability
§ Accessibility
§ Give and Take
§ Anticipation
§ Structure
§ Open Mindedness

Entrepreneurship MGT602 7
Theme 04 Video 41 Franchiser and Franchisee Relationship