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C. Franchising
A start-Up entrepreneur may decide to go into business by simply buying a locally operate let s say Jollibee or Pizza Hut. This practice is known as franchising. In the US alone, the sales in the franchising industry in 1991 were $758 billion as compared to the $334billion pesos in 1980.
Here in the Phils. Sales of franchises went up 100B in 2001 compared to 82B in 2000. This proves the popularity and acceptability of franchising business among Filipinos.
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Franchise came from the Old french franchir, which means freedom, privilege or immunity from burden. During the feudal ages in Europe, the local landlords would grant rights to the subordinates to hold and attend markets or fairs. The landlords then were the first franshisor and the subordinates were the first franchisee. One of the first franchise agreements was during the nineteenth century when SINGER SEWING MACHINE COMPANY gtranted distribution franchises to their dealers. Singer was the first one to issue franchise contracts
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C. FRANCHISING After the world war II there was the expansion of motels, drugstores, variety shops, and employment agemcies which exhibited franchising principle. In the 1950s products and services started to franchise in the US. In 1955, Ray Croc franchise a fast-food chain, called McDonald s . The franchising boom came in 1960 s and 1970 s where fastfood restaurants started to franchise. In the Phils. Mcdonald s and Jollibee were in the market in 1970 s.
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C. FRANCHISING CONCEPTS Franchise- it is an agreement whereby an independent person is given exclusive right to sell a specialized good or service Franchising is a marketing system based on an agreement wherein one party(franchisee or franchisor) is given the right to handle businessas an independent owner but is required to abide by the terms and conditions specified by the other party (franchisor).
For franchisors, franchising means selling the franchise, while for the franchisee or franchiser, franchising understood to mean buying a franchise.
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C. FRANCHISING CONCEPTS
Franchisor
refers to any entity that owns the franchise name and distinctive elements (such as patent, trademark, signs and symbols) which grant the right to sell its products.
Franchisee
or the franchise buyer it is the entit y that buys to operate the business using the name, product, trademark, service mark, product and business format of the franchisor under the terms and condtions of the franchise contract.
Franchising contract
it refers to the legal document involving two parties (franchisor and franchisee) specifying the obligations, primarily of the franchisee and the conditions under which the latter will coduct business.
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BENEFITS OF FRANCHISING Both the franchising and the franchisee can benefit from franchising. For the franchising, this guarantees faster expansion and greater market penetration for his business. In effect, this can lower operating costs. For the franchisee, getting a franchise gives him better brand recognition and less-costly share in local and natinal promotion of the product. Furthermore, the franchisee can avail of management training at less cost. In some cases, the franchise can also enjoy financial assistance from the franchiser.
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TYPES OF FRANCHISING The Product and Trademark franchising involves an arrangement wherein the franchisee is given the right to manufacture and/or distribute a widely recognized brand or product. The franchisor has very little control over how the business is operated but it demands that the franchisee maintain the integrity of the products. Examples of these are franchises in the softdrink industry, gasoline service stations and automobile and truck dealerships.
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TYPES OF FRANCHISING Three Types are: 1. Manufacturer-Retailer franchise in which franchisee buys from the manufacturer and directly sells it to the consumer. 2. Manufacturer-Wholesales franchise- the manufacturer sells to the franchisee partially completed products. 3. Wholesaler-Retailer franchise- wholesaler is the franchisor that grants the retailer the right to retail theproduct but use the wholesaler s name, trademark, logo or other identidfying marks.
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ADVANTAGES OF FRANCHISING
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Possibility of failure is lessened. Increase in new market location through urbanization of local areas, Customers tend to patronize a specific franchised service or product. Customer loyalty and preference for a successful brand name. Better management through training provided by the franchisor. Technical and other assistance is easily accessed from the franchisor. It is easier and faster to build good reputation and gain recognition. A better assurance that the business will be profitable. Obtain greater purchasing power. High performance standards. Advertising cost is less.
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DISADVANTAGES OF FRANCHISING 1. High cost of franchise 2. Operation is controlled by the franchisor 3. Presence of fierce competition 4. Pressure continuously make the product acceptable to the market. 5. Problem associated with expiration of the franchise.
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C. A FRANCHISE PROVIDES:
1. Business Name 2. Market Research 3. System ideals and Operating manual 4. Propriety marks 5. Experience 6. Good judgement of the franchisor 7. Training 8. Location assistance and approval 9. Store lay out and construction supervision 10. Exclusive area coverage 11. Procurement programs 12. Hiring assistance 13. Grand opening assistance 15. Marketing Strategies 16. Research andDevelopment
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D. WHY AN ENTREPRENEUR MAY BUY A FRANCHISE
1. Earning depends on the effort 2. Opportunities for unlimited income 3. Personal Satisfaction 4. Tax benefits 5. Freedom to pursue the job that you want 6. Assurance of continuous employment 7. Eliminates the difficulties in starting up 8. Ease inoperatinalizing the business plan 9. Benefits of having an established system 10. Benefits from quality research and development 11. Quicker start-up 12. Probability of success is High
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C. CONSIDERATIONS IN CHOOSING A FRANCHISE
1. Cost of Investment
1. 2. 3. 4. 5. Franchise Fee Set-up operation Operational expenses and purchases Royalties Advertisements
2. Franchisee s preference and interest 3. Location of the franchise 4. Reputation of the franchise orgranization
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INTERNATIONAL ENTREPRENEURSHIP As entrepreneurs are affected by glozalisation. And a number of forces have led to increased globalization. Thus, all entrepreneurs no matter how much they don t want to grow internationally, they have to trade in an economy that is affected by the trends of the global economy. Trading accross boarders requires some understanding of: 1. different cultures 2. different economies 3. different way of doing business
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The Process of Internationalization
Step 1 The entrepreneur establishes a domestic market
Step 2
The entrepreneur sells in an overseas market through an agent The entrepreneur establishes a subsidiary operation in the overseas market, dealing direct customers
Step 3
Step 4
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INTERNATIONAL ENTREPRENEURSHIP As entrepreneurs are affected by glozalisation. And a number of forces have led to increased globalization. Thus, all entrepreneurs no matter how much they don t want to grow internationally, they have to trade in an economy that is affected by the trends of the global economy. Trading accross boarders requires some understanding of: 1. different cultures 2. different economies 3. different way of doing business
GENERATE IDEAS
Business starts and proceeds with the process of thinking carefully, asking every fundamental questions and giving the clearest answers to them.
TO SEE AN OPPORTUNITY IS NO GREAT ART. THE ART LIES BEING THE FIRST TO SEE IT
Internal Scanning
Existing data or information Past business ideas and ventures
CONSIDERATIONS IN IDENTIFYING BUSINESS OPPORTUNITIES 2. Availability of market 3. Government Support 4. Financial Viability 5. Socio-economic impact in the community.
Types of Businesses
Trading/Vending
Wholesaler Retailer Distributor
Manufacturing/Processing
Exporter Domestic Producer Sub-contractor
Franchising
Food Service Health & Wellness
Service Industries
Health & Wellness Transportation and Communication ICT
Agriculture /Aquaculture
Idea Screening
Make an assessment on the choices of business ideas based on:
Knowledge of the business Experience in the field Skills Ease of Entry Uniqueness