Part Seven - Pros And Cons Of Franchising Model

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Do you know what model to choose in your Life and Business? …

Do you know what model to choose in your Life and Business?

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  • 1. Pros and Cons of Business Models By Val A. Slastnikov, Business Models Expert © 2010 Digitizer Group. All rights reserved
  • 2. PART SEVEN (Pros and Cons Of Franchising Model)
  • 3. What is Franchising?
    • Franchising is a method of doing business wherein a "franchisor" authorizes proven methods of doing business to a "franchisee" for a fee and a percentage of sales or profits.
    Is Franchising for you?
  • 4. Who belongs in this category?
    • Any type of a Franchise Owner (“franchisee”) if you are not a Franchisor
    Do you have what it takes to be a Franchise Owner?
  • 5. “ Franchising” Pros Franchise Leverage: Yes Franchisor’s Model Franchisor’s Success Franchisor’s Training
  • 6. “ Franchising” Cons Franchise Control: No Customer Base: Limited Startup Costs: High Carrying Costs: High Scale- ability: No Growth Potential: Limited Replic- ability: No Multiple Income Streams: No Profit- ability: Limited
  • 7. Level of Effectiveness
    • Pros: 1
    • Cons: 9
    Level of Effectiveness = 10% Franchise Leverage: Yes Franchisor’s Model Franchisor’s Success Franchisor’s Training Franchise Control: No Customer Base: Limited Startup Costs: High Carrying Costs: High Scale- ability: No Growth Potential: Limited Replic- ability: No Multiple Income Streams: No Profit- ability: Limited
  • 8. Analysis
    • Franchising Facts:
    • Franchise is a legal and commercial relationship between the owner of a trademark, service mark, brand name, or advertising symbol (the franchisor) and an individual or organization (the franchisee) wishing to use that identification in a business.
    • The franchise governs the method of conducting business between the two parties.
    • Generally, a franchisee sells goods or services supplied by the franchisor or that meet the franchisor's quality standards.
  • 9. Analysis
    • Advantages of Franchising:
    • Established Brand and Customer Base
    • Marketing Support
    • Business Support
    • Training Support
    • Access to Proprietary Methods
    • Reduced Risk
  • 10. Analysis
    • Disadvantages of Franchising:
    • Initial Payout
    • Royalty Payments
    • Marketing/Advertising Fees
    • Limited Creativity/Flexibility
    • Sole Sourcing
    • Long-Term Contract
    • Dependent on Franchisor Success and Reputation
    • False Expectations
  • 11. Quote
    • “ Why would anybody go out and spend $50,000 on a franchise to makes whatever when you can just start a business with no capital out of pocket and way more scalable ?”
    • – Brad Fallon, a Co-founder of StomperNet
  • 12. Takeaways
    • “ If you are a real entrepreneur – then franchising may not be for you. Real Entrepreneurs don’t own franchises – they choose their own path to success.
    • All franchises are “screening out” entrepreneurs because they don’t want them to mess with existing model.” – Rich Schefren
  • 13. Where do you go from here?
  • 14.
    • CLICK HERE TO GO TO
    • PART EIGHT