Franchising A marketing system revolving around a two-party agreement, whereby the franchisee conducts business according to the terms specified by the franchisor Franchisee An entrepreneur whose power is limited by a contractual agreement with a franchisor Franchisor The party in the franchise contract that specifies the methods to be followed and the terms to be met by the other party Franchisor Controls on Franchisees Restricting of sales territory Requiring site approval and imposing requirement on the outlet’s appearance Restricting the goods/services that can be sold Requiring specific operating hours Controlling advertising Contact:Franchisemart ring Road,21st century surat-395004 No-09909960054

1. Franchising
• Franchising
– A marketing system revolving around a two-party
agreement, whereby the franchisee conducts business
according to the terms specified by the franchisor
• Franchisee
– An entrepreneur whose power is limited by a
contractual agreement with a franchisor
• Franchisor
– The party in the franchise contract that specifies the
methods to be followed and the terms to be met by
the other party

2. What is a FRANCHISE?
A form of business where the franchisor sells or provides to a franchisee:
• the right to do business under a particular trade name or brand
• the right to use/sell a proprietary product, process, or service
• training and assistance in setting up the business
• a business and marketing plan
• economies of scale for purchasing and marketing
• a financial (accounting) system
• regular inspection and quality checks once the business is established

3. Top 20 Franchises for 2011
• Jan-Pro Franchising Intl
• Hardee’s
• Pizza Hut Inc
• Kumon Math & Reading Cntrs
• Dunkin’ Donuts
• KFC Corp
• Jazzercise Inc
• Anytime Fitness
• Matco Tools
• Stratus Building Solutions
• Hampton Hotels
• ampm
• McDonalds
• 7-Eleven Inc
• Supercuts
• Days Inn
• Vanguard Cleaning Syst
• Servpro
• Subway
• Denny’s Inc
Source: Entrepreneur.com, Top Franchises for 2011

4. The 20 Fastest-Growing Franchises - 2011
1. Stratus Building Solutions
2. Jan-Pro Franchising International
3. Subway
4. CleanNet USA Inc
5. Anago Cleaning Systems
6. Pizza Hut
7. Liberty Tax Service
8. Vanguard Cleaning Systems
9. Bonus Building Care
10. System4
11. Chester’s
12. McDonalds
13. Anytime Fitness
14. Coldwell Banker Real Estate LLC
15. Jimmy John’s Sandwich Shops
16. ampm
17. 7-Eleven Inc
18. Choice Hotels Intl
19. Cruise Planners/Amer Express
20. Sears Home & Bsns Franchises Inc
Source: Entrepreneur.com, 2011 Fastest-growing franchises

5. Top 12 Low-Cost Franchises - 2011
• Bonus Building Care
Commercial cleaning 9.02K – 41.92K
• System4
Commercial cleaning 5.46K – 37.75K
• ServiceMaster Clean
Commercial , home & disaster cleaning 47.86K – 161.13K
• Cruise Planners/Amer
Express Cruise & tour travel agency 1.6K – 19.29K
• Chem-Dry Carpet Cleaning
Carpet, drapery & upholstery cleaning; tile & stone care 27.85K – 122.65K
• Vanguard Cleaning
Commercial cleaning 8.2K - 38.1K
• Jan-Pro Franchising Intl
Commercial cleaning 3.15K – 50.41K
• Kumon Math & Read Cntrs
Supplemental education 67.76K – 145.32K
• Jazzercise Inc
Dance fitness classes 2.98K – 75.5K
• Stratus Building Solutions
Commercial cleaning 3.45K – 57.75K
• CleanNet USA Inc
Commercial cleaning 6.66K – 92.95K
• H & R Block
Tax preparation & electronic filing 34.44K – 110.03K
Source: Entrepreneur.com “Top Low-Cost Franchises in 2011”

6. The Pros and Cons of Franchising
• Advantages
– Probability of success
• Proven line of business
• Pre-qualification of franchisee
• Overall lower failure rates
– Training
• Franchisor-provided
– Financial assistance
• Loans & loan guarantees
– Operating benefits
• Location feasibility study
• Marketing assistance
• Quick start-up time
• Limitations
– Franchise costs
• Initial franchise fee
• Investment costs
• Royalty payments
• Advertising costs
– Restrictions on business
operations
• Products sold
• Hours of operation
• Restrictions on expansion/growth
• Franchisor only source of supplies
– Loss of independence
– Lack of franchisor support
• Termination/renewal clauses

7. Franchisor Controls on Franchisees
• Restricting of sales territory
• Requiring site approval and imposing requirement on
the outlet’s appearance
• Restricting the goods/
services that can be sold
• Requiring specific
operating hours
• Controlling advertising

8. An Attractive Franchise Opportunity Includes: - 1
• Registered trademarks
• Successful prototype stores with a track record of
profitability and a positive reputation
• A business that can be systematized so that it can be
easily replicated.
• A product or service that can be successful in many
different geographic regions.

9. An Attractive Franchise Opportunity Includes: - 2
• An operations manual that specifies all the functions of
the business and their associated policies
• A training and support system
• Site selection criteria and architectural standards
• A detailed prospectus that spells out the franchisee’s
rights, responsibilities, and risks.
The Federal Trade Commission requires disclosure...Uniform Franchise Offering
Circular [UFOC]

10. Franchise Disclosure Requirements
• Rule 436 of the Federal Trade Commission
– Uniform Franchise Offering Circular (UFOC)
• A document accepted by the Federal Trade Commission as
satisfying its franchise disclosure requirements
– Litigation and bankruptcy history
– Investment requirements
– Conditions that would affect renewal, termination, or
sale of the franchise
• www.franchisemart.in

11. Franchising Arrangements
• Trade name franchise
– agreement that provides to the franchisee the right to use the
franchisor's trade name and/or trademarks
• Product distribution franchise
– agreement that provides specific brand name products which are resold
by the franchisee in a specific territory
• Business format franchise
– agreement that provides a complete business format, including trade
name, operating procedures, marketing, and products or services for sale
• Piggyback Franchise
– A retail franchise operation within the physical facilities of a host store
• Area Developer/Master Licensee
– Firms or Individuals that obtain the legal right to open several franchised outlets
in a given area
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12. Questions to Ask Before Buying a Franchise
• Does the franchisor have an excellent reputation in the
industry?
• Is the franchisor in partnership or any other legal relationship
with another franchisor? If so, how will the franchisee be
protected should that relationship fail?
• Is the franchisee required to do anything that appears
questionable from a legal or ethical perspective?
• Under what circumstances can the franchisee or franchisor
terminate the franchise agreement and what are the
consequences to either party?
• Will the franchisor grant an exclusive territory? Is that area
subject to reduction or modification? If so, under what
conditions?

13. Questions to Ask Before Buying a Franchise -
2
• Will the franchisor reveal the certified financial figures for
one of its franchises and can those figures be verified with
the franchisee?
• Will the franchisor provide a management training
program, an employee training program, public relations
and advertising support, or credit?
• Does the franchisor assist in finding a suitable location?
• What is the financial health of the franchisor? Can
financial statements be verified?

14. Questions to Ask Before Buying a Franchise -
3
• What is the track record of the franchise?
• Does the franchisor conduct an in-depth investigation of
the franchisee to assure that he or she has the necessary
skills and financial requirements to operate the business
successfully?
• How much capital will be required to start and operate
the business to a positive cash flow? Does the initial fee
include an opening inventory of products and supplies?
What do royalties pay for and how are they calculated?

15. Questions to Ask Before Buying a Franchise - 4
• Can you transfer your franchise license to someone else?
When and how?
• How can you terminate the contract? Under what
circumstances can this be done?
• Can the franchisor terminate the contract? Under what kind
of conditions?
• What disclosures are you required to make? What
disclosures is the franchisor required to make?
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16. Where to Find out about Franchises
• www.franchisemart.in
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