Entrepreneurial opportunity

Author: (American) Lornecke et al
Publisher:
Publish Date: 2002-01-01
Features:
Fragment: p;1 Understand the concepts related to franchising. Franchising provides a unique entrepreneurial opportunity. It involves a standardized agreement and a series of guidelines for operating a business. Franchise companies typically provide system members (franchisees) with names, trademarks, products, operating procedures, and other resources. Franchising enables entrepreneurs to reduce the overall risk of starting a business from scratch. The agreement in franchising allows new business operators to benefit from the accumulated operational experience of all members in the franchise system. The term "franchising" can be defined in many ways. The definition in this book is broad, encompassing various interpretations of the term. Franchising (franchising) is a marketing activity centered around a legally binding franchise agreement between two parties; the franchisee has the right to operate the business as an individual owner but must do so in accordance with the methods specified by the franchisor. The potential value of a franchise agreement is defined by the rights stipulated in the agreement. This legal agreement is called a franchise contract (franchise contract), and the rights specified therein are referred to as franchising rights (franchise). The scope and significance of these rights can vary greatly. For example, a potential franchisee may wish to have the right to use a well-known product or name. The term commonly used to describe this relationship between the franchisor (provider) and the franchisee (buyer) is product and trade name franchising. Gas stations, car dealerships, and bottled beverage merchants are typical examples. Additionally, entrepreneurs may seek a comprehensive marketing system as well as assistance and guidance in the operational process. Such broader relationships are referred to as business format franchising. Fast-food restaurants, hotels, motels, and some service industries are examples of this type of franchising. Since the 1970s, the number of franchised units and sales through this business format franchising model has been growing steadily. A master licensee is a company or individual that has a continuous contract relationship with the franchisor, allowing them to sell franchises. These independent companies or merchants act as sales agents. Master licensees are responsible for finding new franchisees within a specified region. Sometimes, they even provide supporting services such as training and warehousing, which are traditionally more commonly provided by the franchisor. Another widely used franchising strategy is multiple-unit ownership, where a franchisee can own multiple franchise units. Many of these franchisees are area developers—companies or individuals who obtain legal rights to operate multiple franchised outlets within a given region. Piggyback franchising refers to retail franchising activities conducted within the premises of a host store. For example, operating a dessert franchise in an Abbot fast-food restaurant or a car phone franchise in a car dealership. This type of franchising benefits both parties: the host store adds a new product line, and the franchisee gains a more accessible location for customers.