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Franchise

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by

Shewy W

on 24 February 2014

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Transcript of Franchise

Franchise
Type of Business Ownership
Examples
International example
-
McDonald’s :
- Number one company when it comes to having the largest number of franchises worldwide and delivering the most average income
- Franchisee must invest a minimum of $300,000, receive training, and actively work in the location
Advantages
Disadvantages
• limited control
• tied to suppliers
• risk from others
• franchise costs
• cut of your profit
• limited term on the agreement

Trends in Franchising
- Franchises reflect changes in market and market attitudes
Trends in market change franchise types such as shifting demographics, and exponential growth segments
Currently flourishing franchise markets include: recession-proof brands, “Green” businesses, fitness, health and personal care

Sherry, Carol, Cindy, Israel, Roshana, Kaitlyn
Examples
Regional example
-
Bad Boy Superstore :
- Furniture, electronics, appliances, and mattresses franchise
- Locations include Scarborough, Mississauga, North York, Barrie, Kitchener, and Brampton
Tied to Suppliers
You are required to use the franchise supply network meaning a reduction in potential profits.
Franchise Costs
A
franchise
is a type of business in which a franchiser sells to another person (franchisee) the rights to use their business name and vend their products and services for a limited time
Franchising
is the practice of using another firm’s successful business model.

A franchisee is the one that purchases a license from the business

Franchises are considered a hybrid type of business ownership
Franchisees are required to pay an initial cost to buy into the franchise agreement.
Franchiser and Franchisee
Starting a Franchise
Limited Term on Agreement
franchises such as McDonald's provide the franchisee with location and all the equipment to start the business
There is an established time period in which the agreement is valid.
A franchise is one of the easiest types of businesses to start because the franchiser is usually responsible for the equipment
A franchisor does not exercise substantial or significant control over the day-to-day operations of its franchisee

The franchisee has sole responsibility

Franchises are like chain stores except without the liability and investment
Franchise
The word franchise comes from the Anglo-French word
franc
which means free
The Give and Take
A franchise is like a give and take situation
The franchisee receives permission to use the brand and products
However, they have to shoulder the heavy financial burden by themselves
Examples
National example -
Harvey's :
- Second-largest Canadian-established restaurant franchise, behind Tim Hortons
- The franchisee is usually charged a $25,000 one-time franchise fee, excluding property fees
- In order to fulfill niche markets, unconventional types of franchises are created
1. Third-Party Logistics Franchises
3PL: provides services to businesses that have decided to outsource
i.e. Integrated operation, warehousing, and transportation
2. Event Franchising
- same events in different area retaining the same brand, mission, concept and format
i.e. World Economic Forum, When the Music Stops
3. Home-Based Franchises
- franchising of a home-business model
home-businesses are becoming extremely popular due to technological advances

A Recognized Brand
-established reputation with trusted products
-immediate, reliable flow of customers
Important Business Relationships
-provided with instant connections
-major financial advantage
Initial and Continuous Support
-lasting supervision
-management techniques
-advertising
-training system
Interesting Facts
-A brand new franchise starts approximately every 8 minutes of each business day

-More than 75 different industries use franchising as a way to their distribute goods and services

-The top franchise industry currently is fast food

-There are above 78,000 franchises in Canada

-Approximately one out of every 12 businesses in the U.S. happens to be a franchise business

-The average initial franchise investment is approximately $250,000
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