Entrepreneurship and Business start-ups

Presented by: Vatsal Busa MMS-1206.

Brief outline:
What is Franchising

Types of Franchising
Franchisings popularity

Franchising agreement
Advantages of Franchising

Disadvantages of Franchising

What is Franchising?
Franchisee
An entrepreneur whose power is limited by a contractual

agreement with a 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

Types of Franchises:
Trade Name Franchise
Grants the right to use a widely recognized name within a particular

territory

True Value Hardware, Associated Grocers Inc (AGI), Century 21

Product Distribution Franchise (Dealership)

Allows you to sell a specific, brand-name product in a specified territory

Coca-cola, Nike

Business Format Franchise

Provides an entire business plan, marketing, and operating system Guidance from the franchisor is ongoing; supervision & monitoring are

continuous

Subway, McDonalds

Franchisings popularity
Popularity can be seen by the numerous fast-food outlets lining

the highways and shopping malls

McDonalds has an international

network of over 8000 restaurants that sell a billion hamburgers every five months
Every year more than 2000 people

apply for the approximately 150 franchises granted by McDonalds

Franchising Agreement
It is a contractual agreement between the franchisor

and franchisee
Agreement outlines what amount of capital needed, training provided and size of the

territory
Agreement depends upon different franchises, but most franchise contracts have

points in common i.e. The franchise buyer normally pays an initial fee to the company OR A monthly percentage of sales OR Both (in large franchise like McDonalds)

Cont
The agreement information should be provided on a

document called uniform franchise offering circular(UFOC) In addition UFOC also contains information such as

Franchisors bankruptcy and litigation history Company owned locations Legal responsibilities of franchisor and franchisee List of existing franchisees

So it is very important to understand the franchise

agreement before signing it

Advantages of owning a franchise

Probability of success
-Goodwill -Brand name

Training

-Franchisor Financial assistance -Credit rating Format franchising -full range services

Disadvantages of owning a franchise

Costs

-franchise fees
Poor local reputation

-Multiple franchise
Own boss

-Franchisor controls:
Real estate ownership Cancellation provisions Required exclusive handling

THANK YOU