Category : Articles
Good Morning/ afternoon sir and fellow student??™s today I??™m here to talk to you about franchise.
Franchise is defined as a business where a franchisee pays for the right to use an established business??™s trade name and business formula.
A franchisee is the individual entrepreneur or business that buys a franchise and the franchisor is the seller of the business concept.
The franchisee is looking to buy a tried and proven business idea that has been developed by an entrepreneur who took the risk to establish the original business.
Franchising is very popular in Australia. Hundreds of new franchise systems are registered each year. many franchises are found in the fast food industry for example McDonalds Kfc and hungry jacks.
The franchisor remains some control over the franchisee to ensure the franchisee follows the operating system correctly. The franchisor will provide training and marketing support to the new franchisee.
Marketing costs are a key consideration when deciding whether to buy a franchise. The entrepreneur needs to answer the following questions: How much marketing is done by the franchisor and what financial contribution must each franchisee make to the market
How much does each outlet have to pay for promotion and advertising provided by the franchisor And. is there freedom to tailor marketing strategies to suit local markets or are franchisees locked in to the system
Other key considerations are:
It costs more to establish a franchise than a new business and there is the possibility of ongoing fees.
The level of training and support from the franchisor needs to be determined.
Franchisees may not be there own boss due to the level of control by the franchisor.
Franchise outlets may exist in many locations, creating competition between franchisees.
Fees payable by the franchisee need to be compared with the services provided by the franchisor. High fees will be worthwhile if the franchisor provides high quality and consistent support.
The track record of other franchisees will be a concern. In relation to the final considerations mentioned before, there may be a perception by consumers that the business is a chain system, which can affect good will.
The weakness of the franchise system is that a business is judged by the performance of other franchisees.
Before taking on a franchise outlet, the entrepreneur needs to find out about the interview and applications process for new franchisees. It is important that the franchise system is able to prevent
Individuals with poor managerial ability from acquiring a franchise.
The McDonalds franchise has been very successful started in Australia in 1971 where they opened there first restaurant in a Sydney suburb called yagoona. Know there is over 700 McDonalds restaurants across Australia.
Two thirds of the McDonalds restaurants are owned and operated by individual businessmen and women and the other third are run by company staff.
Well that??™s about all I have to talk about today thank you for listening and I hope you enjoyed it.