LICEO DE CAGAYAN UNIVERSITY

Rodolfo N. Pelaez Boulevard, Kauswagan

Cagayan de Oro City, Misamis Oriental

CONCEPT OF FRANCHISING

Submitted By:

Charrysah T. Tabaosares

BSBA – FM4

Submitted To:

Mario E. Temporada

Date Submitted:

August 18, 2020

What reasons can be given for the dramatic development of franchising in the United
States?

 Whereas the United States offers a tremendous opportunity, entering the market the
first at first can be a daunting task due to the size and complexity of the market itself
alongside complying with the perceived complex federal laws and state legal
requirements
 A robust and literature consumer market: Even in a bad economic times, there
seems to be a robust consumer driven economy with a highly informed and literate
consumers which has demonstrated desire for years to accept new branded
products and services
 The US is the largest and the most experienced franchise market in the world
further giving Franchisers hope that they are likely to perform better
 There exists treaties and low barrier to any foreign franchiser entry
 US poses a very strong and improving economy in the World
 Availability of ready labor alongside the seasoned management pool
 There are clear methods of recruiting franchisees thereby simplifying the process
that dome would have lost hope in some countries. This further makes the
development of franchising in the US develop.
 Access to capital and adequate financing to the franchise business. This makes it
easier for the interested business people to venture in unlike some other where
availability of capital is strenuous due to exorbitant interest rates.

Why does a franchisee often have a higher probability of success than a typical
owner-operator of a small business?

 Franchising offers many benefits, including access to a well-known brand, bulk

purchasing power, group marketing support and practical advice from a
knowledgeable management team. Because of this, it doesn’t carry the same risks as
solo start-ups.
  Discussing business challenges or issues with their franchisor or fellow franchisees
is an option not available to solo operators. Franchised owners enjoy all the benefits
of big business, but with the flexibility that comes from running their own show. It’s
the ideal combination of autonomy and centralized, practical support.

 The training provided by franchisors shouldn’t be underestimated either.

Comprehensive ongoing training is available to owners and their staff across all
areas of the business – manufacturing, accounting, merchandising and marketing for
example.

 Solo operators, on the other hand, need to master each individual business
component themselves. It helps if family or friends have skills to contribute,
particularly in the early days.

 The flipside to doing it all is the complete freedom to take your business in any
direction. The control to shape, grow and diversify their own business in their own
way often suits the entrepreneurial spirit of many solo operators.

 Unlike some franchised businesses, solo players are not bound by specific
catchment areas, giving them the flexibility to market their products far and wide,
particularly if they enter the online space.

Why does franchising by its very nature, tend to create new business?

 Because it allows the small or midsize business to compete with giant corporations
through the use of the franchisor’s trademark. Know how, and product-service
quality standards.
  Because of the assistance offered by the franchisor, even those with limited
experience and capital may become successful in the world of franchising.

What are the primary demographic traits of franchisees? Of Franchisors?

 Franchisor needs to be inspiring, supportive and good in communication. A good

franchisor needs to be inspiring to their team of franchisees and to the customers
that buys the product and service. If the franchisor is enthusiastic and passionate
and truly believes in the values and aims of the business then that will cascade down
to the team and beyond. Besides, the relationship between franchisee and franchisor
doesn’t end when the franchise agreement is signed. Franchisor have to recognize
the importance of investment in ongoing support and training for the franchise team
and is in tune with what the franchisees need from the management team. Next, it is
vital that the franchisor is able to communicate the vision for the business to the
franchise team and appreciate that communication is a two way process.

 Meanwhile, franchisee needs to be able to follow the system or system oriented.

Good franchisee will follow the system or blueprint that prepared by the franchisor
as they trust the franchisor with their proven successful business. Franchisee who
willing to learn from others to avoid making mistakes, can be more successful in the
future. Coach ability for the franchisee is also important as they look for the
opportunity to learn more from others in the franchise system. When in doubt, ask.
Franchisee need to constantly ask advice of the franchisor support staff and other
successful franchisees and follow the advice they get so that they understand that
they don't know all the answers and are willing to ask for help when they need it.