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    Entrepreneurship Entrepreneurship Presentation Transcript

    • Entrepreneurship
    • Benefits of Buying Franchise
      Management Training and Support
      Leading cause of business failure is incompetent management.
      Many franchisers provide training and counseling services.
      These program teach franchisees the details they need to know and run for day to day operation successfully.
      Training program can be in the form of in-class or on-site instruction.
      Franchiser provide the necessary training to franchisees continuously.
      Brand Name Appeal
      Franchisees purchase right to use the brand name for product or service.
      Because of brand name, franchisees get so many customers even they open the outlets in a short time.
    • Benefits of Buying Franchise
      Franchisees aware negative actions by franchisers or the others competitors.
      Standardized Quality of Goods and Services
      Because franchisee purchase license to sell franchiser’s product, the quality standard can be determined by franchiser.
      If franchisee try to operate substandard lever, the entire process will be suffer.
      Therefore franchiser has a right to terminate franchise contract if franchisee fail to establish required standard.
      National Advertising Programs
      Effective advertising programs is necessary for the success of franchise.
      Regional or national advertising make benefits to franchisees.
    • Benefits of Buying Franchise
      Advertising campaign is organized and controlled by the franchisers. The franchisers but franchisees actually pay for campaign.
      Many franchisers want franchisees to contribute the minimum amount for the advertising.
      Financial Assistance
      Franchisers don’t provide any financial help because they depend on their franchisees’ money.
      But franchiser provide loan to pay for the initial franchise fees.
      Financial assistance from franchiser take other forms than the direct loan.
      Because of franchiser, franchisee can make good relationship with the bank, nonbank lenders.
    • Benefits of Buying Franchise
      Proven Products and Business Formats
      Even there is a force to establish business, franchisee will follow the standard and business formats of the franchiser.
      These standard procedures can make franchisee success and get more profits.
      Franchisee don’t need to struggle to get brand recognition as much as the local competitors.
      Centralized Buying Power
      One of the benefit of franchisee is the participation of buying the large volume with the franchisers.
      Economies of scale prevent business owner from competing head to head with franchise operation.
    • Benefits of Buying Franchise
      Site Selection and Territorial Protection
      Location is critical for the success of small business.
      Therefore becoming affiliate with franchisers is the best way to get the prime location.
      Although choosing the location is the responsibilities of the franchisees, the franchiser have right to decide about the location.
      Greater Chance for Success
      Even investing franchise is risky, survey said that investing franchise is less risky than building of new business.
      The success of franchise is depend on the franchisee’s management skills, motivation and experience.
    • Drawbacks of Buying Franchise
      Franchise Fees and Ongoing Royalties
      Every franchisee needs to pay the fees and share of revenue to the franchiser for using the brand name, products and services.
      Most franchiser ask the franchise fees for using the brand name however some ask the fees for location analysis, site purchase and preparation.
      Franchisers also impose ongoing royalty fees as revenue-sharing device.
      These ongoing royalties can increase overhead costs.
      To avoid, franchisees should determine how much they need to pay and the benefit they can get from the franchiser.
    • Drawbacks of Buying Franchise
      Strict Adherence to Standardized Operation
      Although franchisee owns the business, he don’t have the right to make decision about operation.
      To protect brand image, franchisers want franchisees to follow their standard.
      If franchise fails to meet with the minimum standard, the franchiser can eliminate the license.
      Franchiser determines compliance of standard with periodic inspection and mystery shoppers
    • Drawbacks of Buying Franchise
      Restrictions on Purchasing
      In order to control quality, franchiser requires franchisees to buy from the approved suppliers.
      The franchiser can’t determine the retail price of the product for the franchisees but they can give the suggestions and advices to the franchisees.
      Limited Product Line
      There is an agreement in the franchise that the franchisee can sell only the products that was approved by the franchiser.
      So franchisee to sell the products which is required in local market is restricted.
    • Drawbacks of Buying Franchise
      Contract Terms and Renewal
      Because the franchise contract is written by the lawyer of franchiser, there is a favor for franchiser.
      Some franchisers want to do the negotiation but the successful franchisers believe that they don’t have to.
      Unsatisfactory Training Program
      Major benefit of franchise is the training program which is supported by the franchiser to franchisees for the continuous success.
      Before signing, the franchisee should find out the detail of training program to avoid unexpected problems.
    • Drawbacks of Buying Franchise
      Market Saturation
      Franchisees reap benefits from the franchise but they also face the franchiser’s strategy: market saturation.
      Franchisees are upset and claimed that their market are saturated and their sales volume are suffered.
      Less Freedom
      When franchisees sign the contract, they agree to sell the products of franchiser.
      Franchisers make ensure the success of franchisee, so they monitor the performance of franchisee.
      Therefore even franchisee can run their business freely, they need to report to the franchiser.
    • The Right Way to Buy a Franchise
      There is a problem because of dishonest franchiser.
      Therefore you should think about the following facts
      Evaluate Yourself
      Before doing franchise you should ask yourself about goals, experiences, like or dislike and income requirement.
      Knowing yourself will help you to narrow your search.
      one point of successful franchise is do the jobs what you want to do.
      Research Your Market
      before doing franchise, you should research your market.
    • The Right Way to Buy a Franchise
      Take some times to know about your customers' requirements.
      Knowing the fad and the long-time trend is the best one for success your business.
      Consider Your Franchise Options
      There are so many options to do franchise in the business magazines.
      You can make a decision what is suitable for your investment.
      Moreover there are franchise showcase sometime and try to attend these showcase can help you to get more information.
    • The Right Way to Buy a Franchise
      Get a Copy of the Franchiser's UFOC
      You should contact each franchiser and ask to show copy of its UFOC.
      It is the important one for evaluating the franchiser.
      And then you should care about the franchisee turnover rate, rate at which the franchisee leave the system.
      Another important aspect is the culture of the franchiser's organization.
    • The Right Way to Buy a Franchise
      Talk to Existing Franchisee
      This is the good and cheap one for investing the franchise.
      You should go and ask the people who are doing the franchise about cause and facts of franchising.
      Make Your Choice
      After doing research, you need to make a choice.
      Moreover you should have the business plan that will help you as a guideline of your business.
      You can manager your financial base on this plan.
    • Benefits of Buying Existing Business
      Successful existing business may continue to be successful
      Purchasing the successful existing business with the reasonable price is good
      New owner can find the new customers while there are still existing customers.
      However it is difficult to modify the existing system.
      Existing business may already have the best location
      Getting the best location is the critical point for business success.
      It is better to buy the existing business which already have the best location.
      Location may be the biggest assets of existing business.
    • Benefits of Buying Existing Business
      Employees and suppliers are already established
      Existing business already established good relationship with the suppliers.
      In addition, existing business has the records of suppliers.
      The suppliers still provide the things what you want and help to run your organization smoothly and successfully.
      Equipment is installed and productive capacity is known
      Buying the new equipments can increase the cost for the buyer.
      Therefore the buyer should determine the condition of equipment and its capacity.
    • Benefits of Buying Existing Business
      Inventory is in place and trade credit is established.
      Proper amount of inventory is required to control cost and provide sale volume.
      Existing business know the inventory level that can overcome both problems.
      Moreover previous owner has established trade credit with the suppliers can that can make benefit to you.
      New business owner hits the ground running.
      The person who purchase existing business can avoid the time, energy and cost required to start up a new business.
      He/ She don’t need to invest for his/ her lifetime building a company.
    • Benefits of Buying Existing Business
      New owner can use experience of pervious owner.
      New owner can easily know the costs and revenue of the business from the experience of previous owner.
      And then the new owner can learn the mistake from the previous owner.
      Moreover previous owner was helpful for unwritten and unmasked rules in the business area
      Easier Financing
      Attracting financing to purchase existing business is easier than finding for the new business.
    • Benefits of Buying Existing Business
      It’s a Bargain.
      Some existing business may be real bargains.
      More specialized business is that buyer can find bargain.
      If special skills are required for doing the business, the number of potential buyer will be smaller.
    • Drawbacks of Buying Existing Business
      It’s a loser.
      Business may be sale because it is struggling and owner don’t want to continue the business.
      Business owner persuade the buyer by using the dishonest information and attractive financial status.
      Buying existing business is very risky.
      If there is a plan to improve the struggling business, the buyer should not think for buying.
      Previous owner may have created ill will.
      Improper business behavior can make ill will for the business.
      Because of ill will, the long-term effects of business may not yet appear in the financial report.
    • Drawbacks of Buying Existing Business
      Employees inherited with the business may not be suitable.
      Previous managers kept marginal employees because of their personal bias.
      For this reason, employees do not welcome the new owner and they don’t be able to accept the management style of the new owner.
      Business location may have become unsatisfactory.
      Prospective buyer should evaluate the existing market area as well as the potential of expansion.
      The important point is that they are buying the future not the existing one.
      If business success has a link to the location, acquiring a business in a declining area is not the good idea.
    • Drawbacks of Buying Existing Business
      Equipment and facilities may be obsolete or inefficient.
      Potential buyer sometime forgets to evaluate the existing equipment and facilities before they purchase.
      Equipment and facilities should be ready and good for the business.
      Change and innovation are difficult to implement.
      It is easier to plan for change than to implement.
      Rules and regulations defined by the previous owner may be difficult for the new owner to change what he/ she want to modify.
      Potential buyer should think about the time and energy to change the ineffective procedures.
    • Drawbacks of Buying Existing Business
      Inventory may be outdated or obsolete.
      Smart buyers know that by evaluating the inventory is better to trust than the balance sheet.
      Therefore buyer must judge inventory by its market value not by its book value.
      Account receivable may be worth less than face value.
      Like inventory, account receivables may be worth their face value.
      Buyer should age the account receivable to determine their collectibility.
      The Business may be overpriced.