1. BCEN 2900 Entrepreneurship Chapter 6 Franchising

2. To Get Started Starting exercise: Read the information on Shep Bostin, page 189 What do you think a franchise is? What types of products/services would work well as a franchise? Why would you franchise your idea out? Take on a franchise?

3. Franchises One firm already has a successful product or service Offers its trademarks and patented business processes to another for… Initial franchise fee and Ongoing royalties

4. Franchises Represent 44% of total U.S. sales! More than $1 trillion 20051980

5. Entrepreneurs Franchisees can be entrepreneurs The ones opening the franchise in their local market Franchisors can be entrepreneurs Different role of being a manager of managers

6. Three Types of Franchises Trademark franchise Franchisee can buy right to use trademarked business name – does not have to buy product from parent Distribution Franchise Use the trade name, sell the parents’ products exclusively GM and Ford dealerships Business Format Franchise Formula for doing business Training, support, advertising

7. Franchise Agreements Single unit agreements Open one store Area agreements Open several stores in one area, up to a maximum Master franchisee: Can also sell franchises to others in that area

8. How to Get Started - Franchisor Develop a business plan for the franchises. Consult an attorney or consultant that specializes in franchising Prepare your policies, advertising, strategy, and management Start to recruit and help franchisees!

9. Developing a Franchise Franchise fee ($25,000-$100,000) Capital Requirements Land Building Inventory Licenses Royalty payment on gross income Advertising fees (on top of your ads) Other fees as agreed upon

10. How to Get Started - Franchisee Decide on a good franchise opportunityopportunity Visit several outlets across its territory and talk Visit an attorney Check the franchise’s references Uniform Franchise Offering Circular Sign agreement and begin training Start your business!

11. Pros and Cons of Franchising Pros Training provided Brand name recognition Quality control Proven business models Site selection help Cons Fees for franchise Required startup capital Restrictions on management methods Purchasing requirements

12. Rules and Regulations UFOC must be offered to potential franchisees to review (p. 373) Franchise agreements and documents must be attached to the circular as well State laws for franchising apply as well Beyond regulation: the ethics problems

13. Food for Thought Two People Person A Creative, spontaneous, thrives on adventure Person B Disciplined, structured, organized Which of these would be best suited for a franchise? Why?