Running Head: STRATEGIC MANAGEMENT OF TECHNOLOGY & INNOVATION

STRATEGIC MANAGEMENT OF TECHNOLOGY & INNOVATION

Franchisee
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Table of Contents
Conclusions.................................................................................................................................................2
Disadvantages..............................................................................................................................................3
Advice before signing franchise contract.....................................................................................................4
Bibliography................................................................................................................................................6
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Conclusions
Franchisee is effective to explore a new phase in career. This allows to working in a new field
which not requires any previous experience of work. It offers extensive support by educating and
understands the organization business model (Alpeza, Erceg, and Oberman Peterka, 2015).
Erlich that is the youngest franchisee within the express oil change system. He has realized that
support of franchisors is beneficial compare to own business. This is very comforting. Following
are the benefits of franchising.

 Career building opportunities

Adults that are disappointed with the views of dull employment within the corporate
organizations have the best option to choose franchising and build their promising career.
Franchising is effective to attract the people from all background and eternities. Franchising has
also become perfect fit from corporate drop out people. Franchising can also be an important and
ideal path to own business within the every stage of life such as profession, recent college
graduates, retirees, etc. This is effective as east the process of struggle and eliminate the risk of
starting a business. For example one of the famous organizations in Kuwait, Tenacious Techies
provides the option to individuals to start their career in digital marketing.

 Safe investment

Franchises are safe investment compare to starting new business. Retirees which look for starting
the second careers are also moving to franchising option (Brown, 2014). These people have the
enough experience and skills which can be applied on the franchise in place of stop working. A
Subway franchisee was opened by Judy Divita and her husband after retirement. This has helped
them to open more shops of sandwich in Columbia. Franchisee provides the basic option to put
within the business very fast. For example, taking the franchisee of Morendi organization is
known as the safe investment. It is known as well established brand in car detailing & chip
tuning.

 Source of capital expansion

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Franchising is serving as the source for capitalized enlargement of successful organization in

place of borrowing money. It also bring the more innovation and helpful to achieve the success
with more opportunities to outperform competitors. This minimizes the risk and help to create
the new legal entity.

Disadvantages
There are also many disadvantages to invest within the franchisee business which are as follow.

 Legal regulation

Business through franchising is regulated activity which requires compliance with the many state
and federal franchise laws (Kolesova, Fangmann, and Cherepanova, 2015). This also enforce
franchisors to work with experienced franchise lawyer for develop the strong blueprint for
franchising.

 Investment

Franchising is known as the source regarding the capitalized expansion of business as franchises
invest within the expansion but establishment of the franchise structure need the investment
regarding capital for covering the cost of establishing the infrastructure of franchising. In case
study, Erlich has taken the amount of $375000 to buy and set the $1.5 million for operation of
franchise.

 Minimize the margins

This is important in franchisee business to pay amount of royalties. These are calculated on the
basis of gross sales in place of profits. This kind of structure affects the margins of profits.
Franchise business creates the threats as not value the franchise system additional costs. For
example, puncture safe is good organization and individual required to invest only little amount.
It is known as the total tyre protection franchise with margins at low level.

 Limited creativity
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Franchises known as the predetermined brand and have creative boundaries for the franchisees
that are looking for explore, change or make important additions to the organization model or
brand (Kubmaul, et al., 2012). Many restrictions are placed on operations of business.

 Financial information’s

Franchisors regularly collect the financial information from franchisees for improve the model of
business and audit payment of royalty. This also have little privacy within the business finances.

Advice before signing franchise contract

Following are the few clauses which are very important to look forward before signing the
agreement of franchise.

 Intellectual property

The main theme regarding the agreement of franchising is licensing of intellectual rights of
property. The franchisor permits the franchisee to use intellectual property like copyright,
trademarks, and concept of business. This is significant to specify agreement of franchise that
intellectual property should be licensed for use. It should also be highlighted within the
agreement of franchise.

 Training

This is also essential for franchisor to ensure the consistency and uniformity within operations of
franchisees. Initial training is an important way to communicate franchisor regarding core
standards, and concepts within the agreement of new franchises (Mazzarol, and Reboud, 2020).
For example, it is important to take the proper training before taking the franchisee of TOPGUN
that is famous barbershop within the Kuwait.

 Royalty

There are many system of royalties which used by the franchisors and most of them need
franchisees to pay the amount of ongoing royalty, percentage of total sales, and typically on the
monthly base. This is very important to mention within the agreement of franchise regarding the
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type and percentage of royalty, payment mode, and dates of due decided within the franchisee
and franchisor.

 Term & renewal

Agreements of franchise deliver the fixed period of five to ten years. This is necessary to owning
the high amount regarding investment for the franchisees to buy the rights of franchise. This is
effective to have the long time contractual relationship. The agreement of franchise should be
review through the legal counsel before process of signing.
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Bibliography
Alpeza, M., Erceg, A. and Oberman Peterka, S., 2015. Development of Franchising in Croatia
Obstacles and Policy Recommendations. Review of Innovation and Competitiveness: A Journal
of Economic and Social Research, 1(1), pp.5-24.

Brown, R.S., 2014. Double moral hazard and franchising: A dual case study approach. Journal
of Organizational Culture, Communications and Conflict, 18(2), p.15.

Kolesova, A.A., Fangmann, G.O. and Cherepanova, N.V., 2015. Problems and prospects of
franchising development in Russia. Journal of Economics and Social Sciences, (7)18, p.4.

Kubmaul, H., Waschbusch, G., Knoll, J., Ruiner, C. and Staub, N., 2012. Franchising–a key to
success in times of financial and economic crises?!. International Journal of Entrepreneurial
Venturing, 4(3), pp.309-326.

Mazzarol, T. and Reboud, S., 2020. Work Book: Franchising and Legal Issues for Small Firms.
In Workbook for Small Business Management, Springer, Singapore.