The types of franchising
Upcoming SlideShare
Loading in...5
×
 

The types of franchising

on

  • 20,484 views

 

Statistics

Views

Total Views
20,484
Views on SlideShare
20,484
Embed Views
0

Actions

Likes
2
Downloads
298
Comments
2

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft Word

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel

12 of 2

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
  • Hey Friends,

    This is only for people that are serious and want to make good money.
    If you are willing to go for it go to this link:
    http://goo.gl/98V0g3
    Enter your details,payment method(how you want to get paid) and start working
    Join the site and start simple and easy work to get paid every month.
    No coast, No hard work.
    Sign up here, http://goo.gl/98V0g3

    Wish you all the best,
    Have a nice day and good earnings
    Are you sure you want to
    Your message goes here
    Processing…
  • The business format franchising works the best!
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    The types of franchising The types of franchising Document Transcript

    • The Types of Franchising Four Types of Franchising How Does a Franchise Work? How to Structure a Franchise What is Included in a Franchise Agreement?Types of FranchisesBy Tanisha Coffey, eHow ContributorThe main distinguishing feature of a franchise is its structure--in other words, the rights that thefranchisor allows a franchisee to have regarding the franchisors products or services. However, asecondary classification of franchise types does exist; its based on the type of franchiseownership. The following is an overview of the types of franchise structures and ownershipclassifications.Related Searches: Buying a Franchise Franchise Franchising 1. Manufacturer Franchise Structure o One of the lesser-known franchise structures is called a manufacturer franchise. The focus of this type of franchise, as the name suggests, is on the manufacturing phase of a products lifecycle. Owners of a manufacturer franchise have the right to manufacture a franchisors product. In some cases, he also may have the right to sell and distribute the products as well. Product Franchise Structure o Those who buy into a business structured as a product franchise are purchasing the right to sell and/or distribute a particular product from a manufacturer. For example, an auto repair shop owner may decide that he wants to sell tires in order to add a revenue stream for the business. In order to have inventory on hand, selected tire manufacturers may require that the auto shop become a product franchisee before it allows the shop to carry its tires. Business Format Franchise Structure o The most common type of franchise structure is the business format franchise. In this type of franchise, the franchisee is buying the right to more than just producing and distributing a franchisors product as in the manufacturer type of
    • franchise, and more than simply selling a franchisors product as in the product type of franchise. Instead, entrepreneurs who choose the franchise business format are really purchasing the franchisors strategic business operation model, which has proven to be effective; and the right to produce, distribute and/or sell the franchisors goods and/or services comes along with that purchase. Single-Unit Franchise Ownership o As stated earlier, types of franchises are categorized not only by the structure but also by ownership. The most common type of franchise ownership is one that is offered as a single-unit franchise. This type of franchisee purchases the right to own and operate one franchise location. Most entrepreneurs who invest in a franchise---whether as a business format franchisee, a product franchisee or a manufacturer franchisee---buy into the franchise as this type of franchise owner. Multi-Unit & Area Development Franchise Ownership o Aggressive or experienced franchisees may opt for a more involved type of franchise ownership such as multi-unit franchise ownership or area development franchise ownership. The two types of franchise ownership types are similar in that the franchise owner has more to manage than a single-unit franchise owner and they differ only in how and what is managed. The multi-unit franchise owner manages multiple franchise locations while the area development franchise owner typically owns a single franchise that has the right to do business across a vast area---multiple cities or states, for instance.Sponsored Links RSM Sales & Ops Planningwww.rsm.nl/s-opRead more: Types of Franchises | eHow.com http://www.ehow.com/about_5343691_types-franchises.html#ixzz1np13Hahx Entering a Franchise AgreementThis brochure has been prepared by the Maryland State Bar Associations Public Awareness Committee.It is intended to inform the public and not serve as legal advice.INTRODUCTIONEntering a franchise arrangement is one option to start your own business with minimum risk. Althoughsome franchises offer tried and true plans for business opportunities, prospective franchisees must bewary of franchisers who appear to offer sure-fire methods for success while struggling themselves to stayalive in the market. The mere fact that a business is franchised is not a guarantee of its success. If youare considering entering a franchise agreement, be prepared to do the same research and carefulplanning that go with any start-up venture.
    • THINGS TO KNOW BEFORE CHOOSING A FRANCHISEBefore you decide that franchising is right for you, consider several factors. Investigating and closelycomparing three or four franchisers will give you an idea of "norms" in the industry. Information about afranchiser and its expectations can be obtained from the franchiser and various governmental and tradeorganizations. As a prospective franchisee, you should obtain as much information as possible. The listbelow is far from being all-inclusive; however, it provides a guide for essential issues to evaluate: Just as in any business venture, franchised businesses are subject to market fluctuations and economic trends. You should obtain a thorough analysis of an areas demographics to decide if the potential location is prime for such an operation. Just because a restaurant is successful in southern California does not mean it will be successful in Maryland. Evaluate your knowledge of the franchise business. How much, if any, experience do you have in the area? If you do not have much experience, decide whether the franchisers training program will compensate for your lack of experience. Be willing to devote a great deal of time, effort and money to the operation. Franchisers often require that the franchisee be personally involved in the day-to-day operations of the business and personally guarantee the financial obligations of the business. Do not be deceived. You will not simply negotiate the deal and wait for the profits to roll in. Find out how many franchises the franchiser owns. Significant franchiser ownership may show the franchisers confidence in its product and create common interests between the franchiser and franchisee. The cash needs for the franchise operations are similar to any other start-up business. As a franchisee, you must pay a franchise fee in addition to financing the premises, equipment, advertising and operating capital. Franchisers will usually provide an estimate of capital required to start, but it is best to obtain an independent evaluation. As a franchisee, you will be required to follow the franchisers operational requirements. Often, such requirements are all-encompassing. Therefore, if you are an independent person who prefers to do things your own way, you should evaluate whether you can operate within the structures of the franchise.ENTERING A FRANCHISE AGREEMENTAfter narrowing down the field and deciding upon one or two franchises, carefully scrutinize the franchiseagreements. Depending upon the franchiser, you should be able to successfully negotiate some terms ofthe agreement. Franchisers generally will not agree to major variations; however, the widely-held notiontha franchise agreements are nonnegotiable is not true. Below are some issues that may arise whenreviewing franchise agreements. Although these issues will not arise until negotiations begin, keep themin mind when comparing franchises in the first stages of investigating business opportunities. You will be required to pay a franchise fee set by the franchiser. Usually, they offer two main selling points: a trademark and a marketing or business plan. Potential franchisees should assess the strength and image of the trademark, and its potential confusion with other trademarks. Consulting an Intellectual Property attorney if possible, may be helpful in making such an assessment. Moreover, the franchise, agreement should contain specific representations regarding ownership and genuiness of the trademark. The franchise agreement should also obligate the franchiser to indemnify you, the franchisee, from any claims by third parties challenging the validity or use of the trademark. Bearing in mind the potential location of the operation, you should arrange for an independent evaluation of the business strategy. In addition to the up-front franchise fee and royalties that you may be required to pay, additional hidden costs may be associated with the franchise operation. These hidden costs can come in many forms such as accounting fees, lease location expenses and supervision fees. Furthermore, the franchiser may be receiving additional sources of revenue from the franchise arrangement, such as rebates from suppliers.
    • You should carefully consider the geographic scope of your proposed franchises territory while keeping in mind its location and your ultimate business plan. The franchise term is an issue that is sometimes disputed. Franchisers typically grant terms of eight to 15 years. You, as the franchisee, should ask for a term that allows you to establish the business and recover your capital costs. Be careful; franchisers can terminate some franchise agreements at will upon written notice to the franchisee. Although the franchiser may insist on flexibility, it is not in your best interest, especially if you must pay a substantial up-front fee. You and the franchiser must also agree upon: the ability to renew the agreement; what will happen to the franchise if the franchisee dies; whether the franchiser can sell competitive products; and the amount of ongoing services that the franchiser will provide during the term of the agreement. While these issues are too complicated to consider here, be aware that important business and legal issues arise when entering a franchise arrangement. You should consult a lawyer and an accountant before entering such an arrangement.SOURCES OF INFORMATION ABOUT THE FRANCHISEObtain information from several sources. First, ask the franchiser for a list of all existing and pastfranchisees with names, addresses and telephone numbers, and call as many as possible. Ask questionsabout the business and about the franchisers representations. Any reluctance by a franchiser to providethis information should cause concern.Next, each franchiser doing business in Maryland must register with the State. Registration requires thefranchiser to file a disclosure document, called a prospectus, which contains important informationdescribing the franchise. By law, the prospectus must provide pertinent details about the franchise offer,including the franchise fee or information about the way the fee will be set. Moreover, a franchiser mustprovide a franchisee with a copy of the prospectus and copy of any agreement involved in the sale of thefranchise. Such copies must be provided either the first time the franchiser and franchisee meet, or within10 days before any contract is signed or payment is made that relates to the franchise.If the franchiser will not provide this information, you may contact the Office of the Attorney General toreport this conduct and/or to obtain the prospectus, if one has been filed. You should also contact theAttorney Generals Office and/or a private attorney if the franchiser provides you with false or misleadinginformation. Write or call: Securities Commissioner, Office of the Attorney General, 200 Saint Paul Place,Baltimore, Maryland 21202-2020, (410) 576-6360. You may visit the Attorney Generals website atwww.oag.state.md.us; franchise information may be found under "Securities."And finally, the International Franchise Association (IFA), a trade organization located in Washington, DCprovides information about franchise opportunities, individual franchisers and franchising arrangements.The IFA makes this information available to the public through a series of books, tapes and pamphlets.For a list of materials, write or call International Franchise Association, 1350 New York Avenue, Suite900, Washington, DC 20005, (202) 628-8000. Entering a Franchise Agreement © 1994, MSBA, Inc. Revised 2002 All rights reserved. No part of this work may be reproduced in any form without written permission from the Maryland State Bar Association.Top 5 To Try The Types of Franchising Four Types of Franchising How Does a Franchise Work? How to Structure a Franchise What is Included in a Franchise Agreement?
    • Ads by GoogleTypes of FranchisesBy Tanisha Coffey, eHow Contributor Print this articleThe main distinguishing feature of a franchise is its structure--in other words, the rights that thefranchisor allows a franchisee to have regarding the franchisors products or services. However, asecondary classification of franchise types does exist; its based on the type of franchise
    • ownership. The following is an overview of the types of franchise structures and ownershipclassifications.Related Searches: Buying a Franchise Franchise Franchising 1. Manufacturer Franchise Structure o One of the lesser-known franchise structures is called a manufacturer franchise. The focus of this type of franchise, as the name suggests, is on the manufacturing phase of a products lifecycle. Owners of a manufacturer franchise have the right to manufacture a franchisors product. In some cases, he also may have the right to sell and distribute the products as well. Product Franchise Structure o Those who buy into a business structured as a product franchise are purchasing the right to sell and/or distribute a particular product from a manufacturer. For example, an auto repair shop owner may decide that he wants to sell tires in order to add a revenue stream for the business. In order to have inventory on hand, selected tire manufacturers may require that the auto shop become a product franchisee before it allows the shop to carry its tires. Business Format Franchise Structure o The most common type of franchise structure is the business format franchise. In this type of franchise, the franchisee is buying the right to more than just producing and distributing a franchisors product as in the manufacturer type of franchise, and more than simply selling a franchisors product as in the product type of franchise. Instead, entrepreneurs who choose the franchise business format are really purchasing the franchisors strategic business operation model, which has proven to be effective; and the right to produce, distribute and/or sell the franchisors goods and/or services comes along with that purchase. Single-Unit Franchise Ownership o As stated earlier, types of franchises are categorized not only by the structure but also by ownership. The most common type of franchise ownership is one that is offered as a single-unit franchise. This type of franchisee purchases the right to own and operate one franchise location. Most entrepreneurs who invest in a franchise---whether as a business format franchisee, a product franchisee or a manufacturer franchisee---buy into the franchise as this type of franchise owner.
    • Multi-Unit & Area Development Franchise Ownership o Aggressive or experienced franchisees may opt for a more involved type of franchise ownership such as multi-unit franchise ownership or area development franchise ownership. The two types of franchise ownership types are similar in that the franchise owner has more to manage than a single-unit franchise owner and they differ only in how and what is managed. The multi-unit franchise owner manages multiple franchise locations while the area development franchise owner typically owns a single franchise that has the right to do business across a vast area---multiple cities or states, for instance.Sponsored Links RSM Sales & Ops Planningwww.rsm.nl/s-op Good collaboration drives success in the supply chain. Learn how? Nairobi Organisationswww.Mocality.co.ke An Extensive List of Organisations with Contact Details. Search Now! Entrepreneurship Schoolwww.london.edu/summerschool Get your business launched with help from top entrepreneurs Small Business Start UpRegus.co.ke/Start-Up Reduce your Office costs. Get a Virtual Office today!Related Searches FranchisesRead more: Types of Franchises | eHow.com http://www.ehow.com/about_5343691_types-franchises.html#ixzz1npu5UxAA