1. Marvin Ryder Assistant Professor, Marketing & Entrepreneurship MBA P715 Entrepreneurship Week 7

2. Business Life Cycle Phase 0Phase 1Phase 2Phase 3Phase 4Phase 5 Idea to Start-up Owner- Operator Owner- Manager Emerging Functional Management Transition Owner as Manager Functional Management Owner as Operator Emergence of the General Management Role

3. Types of Franchising Agreements 1) MANUFACTURER  RETAILER (Car Industry) 2) MANUFACTURER  WHOLESALER (Soft Drink Industry) 3) WHOLESALER  RETAILER (IDA, IGA, Home Hardware) 4) SERVICE SPONSOR  RETAILER (Restaurants, Clothing Stores)

4. Pros/Cons for the Franchisor AdvantagesDisadvantages Ability to grow quicklyDifficult to retain control Growth with little franchisor capital or human resources Can lose credibility and image due to franchisees Can share cost of activitiesHard to develop uniformity Franchisees more motivated than company-hired managers Hard to introduce change to all franchises Local knowledge of franchisee Additional insights from franchisees

5. Pros/Cons for the Franchisee AdvantagesDisadvantages Economies of purchasingSome loss of independence Support system – marketing, bookkeeping, location, layout Contracts restrict freedom of expansion and sourcing National/regional promotionShare revenues – royalties Proven/tested business concept – 80% success rate Hard to make changes to respond to local consumers Can start with limited skills and experience Failure elsewhere in system can be reflected nearby

6. ItemMeasuresBasis for Judgment ObjectivesDesired rate of return Desired lifestyle Personal goals Self-Assessment Business ConceptMarket niche Unique product appeal Stage in life cycle Opportunity window Royalties & terms Franchise prospectus Market research Publications/journals Track RecordActual rates of return Product quality/appeal Market share/position Demonstrated innovation Financial statements Rating services Franchise shows and associations Support SystemTraining support Promotional support Accounting systems Management policies Operations manual Visit current outlets Employee/franchisee comments Franchise prospectus Checklist for Buying a Franchise

7. Toronto, Ontario February 20 & 21, 2016 Toronto Congress Centre, South Building, Hall F 11:00 a.m. – 5:00 p.m. A&W Food ServiceCrabby Joe’sInstant ImprintsPita Pit Bagel WorldDairy QueenKumon CentresRicky’s Cafe Booster JuiceFatburgerLittle Caesar’sSignarama Boston PizzaGlass DoctorMary Brown’s Chicken Smoke’s Burritoire Cacao 70Hickory Dickory Decks Mister Transmission The Works Burgers