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Introduction of franchising
Introduction to franchising
Introduction to franchising
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Are you deciding to go into the franchising business? How do you know which business you should go into?
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INDUSTRY STATISTICS, MARKET SHARE, PROSPECTS AND GROWTH OPPORTUNITIES
Subway belongs to the sandwich and sub store franchise industry which has managed to be eminent for the past five years during the US economic recovery. It stood at fifth place in an industry that averaged some P22 billion total revenues with an annual growth rate of 2.4% for the past 10 years and employed 518,888 people from a total of 26, 740 businesses.
This industry has kept the consumers’ appetites satisfied, having developed new menu options that took advantage of the market’s preference for a low-fat diet. It also grew by introducing products
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The average franchisee fee ranges from $25,000 -$35,000, although some franchise fees can go well over $100,000, as in the case of what’s called a Master Franchise. In a Master Franchise, one buys the rights to an entire area, and it’s usually based on population.
The royalties are usually based on a % of gross sales. Royalties range anywhere from 4%, all the way up to 9%. Some franchisors charge a flat monthly royalty fee.
In addition to royalties, franchisees usually pay into a national monthly advertising/marketing fund, which amounts to 1-2% of gross sales. 639
WHY GO INTO THE CAR WASH BUSINESS INSTEAD OF SUBWAY AND SANDWICH INDUSTRY?
In summary, if you want to go into the franchise business and if you happen to be:
1) Environment-friendly and is into preserving nature’s resources, such as water, because it uses only 2 gallons of water to clean 15 vehicles;
2) Wants to be part of an industry with a lot of potential growth;
3) Prefer affordable entry fees/initial investment; low costs or almost nothing when it comes to royalty/advertising
The average revenue that In-n-out makes is roughly $575,000 million per year. In-n-out mission statement is “Quality you can taste” which is primarily one of the reasons why they don’t want to franchise; they don’t want the quality to go down. In-n-out only has restaurants where their main distribution center is within 300 miles of the store because they don’t allow microwaves or ovens in the restaurant. Their main focus is the quality of the food and keeping it fresh with only the highest quality ingredients. In-n-out keep a very simple menu item which consists of burgers, fries, and milkshakes.
Fast-food franchises are an important part of many high schools income. This money, provided by the students, goes towards extra academics, sports, even art and music programs. When high schools could just as easily serve the same portions of regular school cafeteria food, and make the same amount of revenue by charging the same price.
• The franchisees would have to raise approximately $750,000 of outside financing to fund the venture
Kinsell, Krik. (June 2005). Factors to consider when planning consolidation. Franchising World, Vol. 37, Issue 6, pp. 63–65. Retrieved September 2, 2008, from: kirk.kinsell@ichotelsgroup.com
Assume required profit is equal to selling, general and administrative expenses so after expenses they will breakeven.
Demand for Panera franchising opportunities was very high, which allowed Panera to be picky about where and with whom they would do business. Panera determined where bakery-café locations could be. The franchisees bore the cost of opening new locations, and were required to obtain their ingredients from the home company. Expansion using the franchise model provided many upside benefits for Panera, while limiting the downside r...
"RIAA Accounting: Why Even Major Label Musicians Rarely Make Money From Album Sales." Techdirt. N.p., n.d. Web. 05 Feb. 2014.
Wendy’s is one of the world’s third largest hamburger companies that is quick service. There are over 6,500 company and franchise restaurants worldwide. Wendy’s mission is to stand for honest food, higher quality, fresh wholesome food, prepared when you order it, prepared by Wendy’s kind of people, do it Dave’s Way, we don’t cut corners. This company believes in fresh and non-frozen products so the customers are satisfied and now they bought from an honest restaurant. The foundation believes in long term success that include there core values in every production. The core values are “Quality is our Recipe” “Do the Right Thing” and “Give Back”. Wendy’s focuses on the responsibility that the stakeholders are also the key to success.
Zaxby’s is in the growth stages of expansion. The founders are seeking new franchise owners who want to get in on a ground floor opportunity on what they feel is the next big nationwide restaurant chain. Zaxby’s is looking for franchisees who have business experience, and strong financial background, and knows how to work in a team environment. There are certain qualifications
Not having to answer to a corporate boss is the dream of many and the flexibility that owning a business franchise creates provides this option. Success is not reached by simply creating a business, however. The level of success is measured by the size and efficiency of the business. Business growth is the driving force of the economy. The additional jobs and revenues created when a business expands allow the economy to grow at exponential rates. One of the fastest and most popular ways to increase the size of a business is to turn it into a franchise, which can then be purchased by individuals. Franchising provides opportunities that are beneficial to both the parent company and the purchaser. The company that owns the business can expand without having to pay such a large initial cost to open a new store since the franchise purchaser pays a cost to open the business. As well, the company can regulate many of the business activities so that there is a sense of consistency throughout all of the locations. The purchaser is allowed to use the trademarks and goods of the franchise which already have a large market presence. As well, they are provided with training and work standards by the company to help their business run smoothly (Kalnins & Lafontaine, 2004, p.761). Looking at the business model of the world’s largest food retailer, McDonald’s, provides great insight into franchising and business growth in general as well a better understanding of a global business that utilizes the franchising technique.
Burger King uses a dispersed configuration for day to day operations as the majority of their restaurants are franchises with local suppliers. Yet Burger King Headquarters uses a concentrated configuration for marketing and development of products, as well as pricing. This centralization of marketing assists all franchises worldwide and provides the greatest value for the company, but the direction of available products and pricing has proven detrimental to the overall success of the firm. An article on CNNMoney.com describes the failure of the $1 double cheese burger to stimulate sales and how a number of franchisees filed lawsuits against the headquarters due to being forced to sell the double cheese burger at less than cost in order to boost revenues for the headquarters and shareholders and not the franchisees.
Most of the revenue of 2013 has been brought by the Media Networks and Parks and Resort segments, bringing in 20.36 and 14.09 billion USD respectively. The other three segments, studio entertainment, consumer products and interactive have brought 5.98, 3.86 and 1.06 billion USD respectively.
Three Things to Do Before Buying a Franchise Buying into a franchise can be a good opportunity for an entrepreneur. Some franchise purchases have led to great wealth. With hard work and the right franchise, the sky's the limit. However, you need to take certain steps to insure that you are buying into the right franchise. The following are three things you need to do before you sign on the dotted line.
The first step in any business is to think of or create a business idea. Without an idea, one cannot launch their business off the ground. A right direction is needed to create a business with a unique idea. However, other options include franchising or buying an existing business (1). Franchising allows an individual to run stores such as Burger King or McDonalds under the corporate name. It involves taking training classes and a heap of money in order to start a franchise. A Franchisee will have to buy products and services from the corporate entity they are franchising from, which is often required. Buying a franchise is like taking a piece of the pie from the company that is franchising and sharing that pie with everybody else. In addition having a franchise allows one to communicate and in essence become a big part of an added business opportunity (4). Franchising is far from easy to start and maintain for that matter. Starting a franchise involves a l...
A franchise is simply investing money in a location or store, and then having the store become your own business after learning how to manage the entire business. You earn the majority of the profits, and you also don't have to worry about operations. You'll be taught by the company on how it run the entire business, and this is the reason why this is a huge and very easy way to become rich. Franchises require quite a hefty investment depending on the business you plan to buy. However, if the business is in high demand, there is profits to be made. Take for exMple the Cold Stone Creamery business. Countless people purchase one of their many franchises. The money is very good, the opportunities are endless, and the fact that there is no more need for advertising is what makes this more worth the investment in the long