Contemporary Entrepreneurship Purchasing a Franchise Ron Runyan, Presenter ROP Business and Computer Applications

Purchasing a Franchise uDuDefinitions Franchising- method of doing business where a franchise is guaranteed the right to engage in offering, selling, or distributing products or services within special marketing format. Franchisee- person who buys a franchise Franchisor- person or company that offers the franchise to others Royalty- ongoing fee paid to a franchisor at specific intervals (often percent of gross revenue or net sales)

Classifications u Automotive products/services u Business aids/services u Campgrounds u Clothing/Shoes u Cosmetics/Toiletries u Dental centers u Educational products/services u Employment services u Foods u Motel/Hotels u Printing u Real estate u Security systems u Vending

Advantages u Provides an established product or service u Management and/or technical assistance u Consistency and quality control u Less operating capital & opportunities for growth

Disadvantages Expected services not in contract Franchisee required to pay franchisor for a long time Heavily dependant on advice from franchisor not diminishing w/time Restrictions placed on contract by franchisor Franchise contracts control the terms of the sale Chain stores can carry the stigma of success or failure with them

7 Mistakes That Can Kill Your Business 1. Running out of cash  Need a cash-flow budget 2. Not knowing your customer  Customers’ preferences  Competitors’ products  Who are they? What do they want now? What will they want next?

7 Mistakes That Can Kill Your Business 3. Doing it all on your own  You may be the key but cannot DO everything by yourself  The right person at the right place at the right time at the right price 4. Ignoring employees  Motivating and managing employees  Unresolved problems can destroy morale, productivity, and profits

7 Mistakes That Can Kill Your Business 5. No business plan  Need a written plan; instinct is not enough 6. Computer chaos  Help or hindrance 7. Ignoring the numbers  Goal is to make a profit – must be able to record and analyze key ideas