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MGMT 310 - Chapter 15.
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MGMT 310 - Chapter 15.
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MGMT 310 - Chapter 15How many franchising outlets are there?
766,000
How many jobs does franchising cover?
7.6 million
How much economic output does franchising consist of?
$654.2 billion
Franchise
Comes from an old dialect of French and means privilege or freedom
What percentage of franchises fail in the first 4-7 years?
45%
Franchising
Form a business organization in which a firm that already has a successful
product or service licenses its trademark and method of doing business to
another individual in exchange for a franchise fee
Product and Trademark Franchise
-An arrangement under which the franchisor grants to the franchisee the
right to buy its products and use its trade name
Business Format Franchise
, -An arrangement under which the franchisor provides a formula for doing
business to the franchisee along with training, advertising, and other forms
of assistance
- Fast food, gas stations
Individual Franchise Agreement
Franchisor to Franchisee
- Involves the sale of a single franchise for a specific location
Area Franchise Agreement
Franchisor to multiple Franchisees
- Allows a franchise to own and operate a specific number of franchisees in
a particular geographic area
Master Franchise Agreement
Franchisor to Franchisee to SubFranchisee
- Allows a franchisee to own and operate a specific number of franchises in
a particular geographic region and provides the franchisee the right to sell
to other who find and manage their own franchises
When to Franchise?
- Approach with caution and care
- Regulations
- Most appropriate when a firm has a strong or potentially strong trademark,
a well designed business method and a desire to grow
- Fail because they don't add value for the customers and its business
method is flawed
Steps in Setting Up a Franchise System
1. Develop a franchise business plan
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