A critical observation on

franchising and

entrepreneurship along

with a highlight on the

close relationship

between the two in the

comparative and

similarity background

[Sonali Roy]1

Introduction:

This critical study focuses on the various issues regarding the relationship between franchising and entrepreneurship. Actually, various types of businesses have been as well as are developing with the golden touches of franchising and entrepreneurship all over the world. Many organizations are getting swelled by these two forms of running businesses. But, there are so many controversies regarding the issue whether franchising and entrepreneurship are the two sides of a single coin. There are many experts who are for and against this issue respectively. Some people opine that franchising can be modeled on the basis of entrepreneurship, that is, they reflect on the point that franchising may obtain the characteristic features of entrepreneurship. There are also some people who state that franchising is a kind of entrepreneurship. But, there are also some experts who are against the acceptance of franchising in the light of the characteristic features of entrepreneurship; they are willing to draw a comparison between the two. For them, the two terms ‘Franchising’ and ‘Entrepreneurship’ differ from each other both in characteristic and functional perspectives. These controversies can have a clearer direction if these two terms are defined and explained as well.

History of Franchising:

Franchising is an age-old practice of spreading one’s business in order to gain marketing benefits with the help of distributing the business among the entrepreneurs with the help of selling the dealership of the business. The business format of franchising first came into existence in the United States of America.In the mid 19th century, Isaac Singer invented the sewing machine, and with this invention the convention of spreading the business with the help of franchising came back in the market with awe-inspiring consequences. In fact, Isaac Singer began to spread the use of franchising in order to increase his market benefits for selling his sewing machines. A small stream of food industry franchising got mixed up with Ray Kroc in the year of 1955, and this is presently known as McDonald’s, one of the leading companies, habituated to use franchising as the format of business for increasing the organizational as well as the marketing benefits. In a franchising form of business, the owner is said to have coverage over the distribution of his/her goods or services with the help of the affiliated dealers, who are termed as ‘franchisees’.

What is franchising?

Franchising may be designated as working as the ‘local representative’ habituated to play a vital role in the fields of marketing and running the total marketing activities with the help, assistance, and guidance provided by the franchisers, who are said to be the principal figure in the franchising format of business.There are so many countries all over the world, including USA, Europe, Brazil, Canada, New Zealand, China, Spain, UK, Australia, and India etc. where franchising is being used as one of the leading forms of businesses. These countries are attempting to increase their

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business profits with the help of franchising. But, now, the meaning of the very term should be explained in an understandable manner.

Terminology:

The very term ‘Franchising’ is said to have originated from the Anglo-French- ‘franc’. It means ‘free’. In fact, the business form of franchising consists of two terms-one is franchiser, and the other is franchisee. Now, the question arises who the franchiser and the franchisee are. One who has already experienced a successful venture in business with the help of the product or services has the eligibility of becoming a franchiser. A franchiser works for a payment from the franchisee. The franchisee has to issue a one time payment to the franchiser. A franchiser is then responsible for providing the franchisee with every possible guidance as well as support regarding the business. The franchisee has also the right to use the brand name or the trademark of the franchiser.

Definition and meaning of Franchising in detail:

Let’s have an example and elaborate the meaning of the term ‘franchising’. Suppose A has achieved enough success in business. Now, B is willing to start up a new business by using the brand name or trademark of A. In this respect, B has to pay A in order to have the every guidance and support from A. Here, the fact is that A is responsible for providing B with the required assistance regarding business, including training of the employees, branding of the products, merchandising, marketing, and so on. B has to issue a one time payment as well as the revenue from the business as royalties to A. In this example, A is the franchiser and B is the franchisee. So, we can define ‘franchising’ as one of the leading forms of business where one party (franchiser) is willing to provide every assistance or help regarding business to another (franchisee), including training of the employees, the permission to use the brand name or trademark of the franchiser, marketing of the products or the services as to per requirement, the support for promoting the business process, experimented products, assistance regarding the upgrading of the products, and helpful techniques to carry on the business successfully etc. in terms of certain conditions, including, obviously certain amount of the franchisee fees as well as a part of the business revenue as royalty.

Let’s seek for the experts’ thoughts and opinions about the characteristic features of franchising:

“Strategically, franchising is an organizational form chosen by entrepreneurs (franchisers) in order to compete in certain business.” (Steven C. Michael). If we illustrate the definition provided by Steven C. Michael, we are having another featuring characteristic of franchising, that is, a franchiser gets engaged in this franchising form of business in order to enjoy the competition in certain businesses. We also get the point that franchising allows the franchiser to experience extra benefits from the business in exchange of lower monetary compensation. This is really the plus point for the franchiser in franchising. Another important characteristic is that Steven C. Michael has designated

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franchisers as ‘entrepreneurs’. It means that franchising form of business is closely related with that of entrepreneurship. Franchising “focuses as cheap source of capital for retail expansion” (Oxenfeldt and Kelly in 1968-69). Franchising has been identified as the means where “franchisers obviously seek for financing by the franchisees presumably based on the resistance to share strategic control with outsiders” (Kaufmann and Dant in 1996).

“The nature of business format franchising focuses on the franchiser’s ownership of the trade name and the proprietary method of doing business, which are leased to the franchisee in return for the payment of fees and royalties, and the submission to rather complete control with a very limited ability to sell or pass the franchise on to heirs.” (A Conceptual Perspective on Multi-Unit Franchisees Journal: Journal of Business and Entrepreneurship, published in January in the year of 2000, exhibited by Grunahgen, Marko, Mittelstaedt, and Robert A.)

This definition of the franchising form of business clearly states that a franchisee is free to enjoy the trademark as well as the brand name of the products or service facilities of the franchiser, and for this opportunity, the franchisee will have to pay the franchising fees along with a certain percentage of the business revenue as royalties. It also makes clear that the franchisee enjoys the ownership of the franchiser, and the franchiser is responsible for providing the franchisee with every possible guidance and support regarding business, including, marketing, training of the employees, merchandising, useful advices in connection with promoting the business as well as upgrading of the products or services and so on. This definition is clearly suitable to the above mentioned example.

The featuring characteristics of franchising as per the description provided by Steven C. Michael:

There are some critics who are willing to consider franchising as a part and parcel of the distribution system in the business world. There are also some critics who designate franchising as the means for the expansion of one’s business by ‘transferring’ the rights to the franchisees in return of some fees, which are charged at the very outset of franchising, to market the allotted goods or services in some particular localities or areas.

“Franchising has two characteristics that distinguish it from other inter-organizational forms such as equity joint ventures and strategic alliances. First, franchising typically occurs in business where there is notable service component that must be performed near customers. The result is that service- providing outlets must be replicated and disperse geographically. The second key characteristic is that franchise contracts typically reflect a unique allocation of responsibilities, decision rights, and profits between a centralized principal (franchiser) and decentralized agents (franchisees).” (Steven C. Michael). We are fortunate to have the characteristic features of franchising from the words of Steven C. Michael.

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From this characteristic description by Steven C. Michael, franchising is definitely a contractual relationship between the franchiser and the franchisee. It also states the fact that the franchiser is the central figure in the franchising format of business organizations. Though the franchisee pays for all the responsibilities carried out by the franchiser, yet the franchisee depends much upon the franchiser. It is the franchiser who contributes a lot in the development of the business of the franchisee.

There are various types of franchising forms of business:

There are various types of franchising forms of business scattered all over the world. These forms include the presences of social franchising, event franchising, and home based franchising. There are so many social enterprises which are habituated to adopting the social franchising. This kind of franchising is best suited to the soap making industries, whole food processing organizations, and the hotels and restaurants business set up. There are many hotels and restaurants which have adopted this kind of social franchising. The franchising system of social franchising in Germany includes a coverage of about 50 franchisees, which are going forward with much improvement as well as development in the economic sector by leading the franchising business to a new horizon of economic growth and stability. Over and above these instances, there is the golden presence of St. Mary’s Place Hotel in Edinburg which is doing very well in the social franchising form of business.World Economic Forum, World Social Forum, and When The Music Stops in the United Kingdom are the examples of the organizations which are developing in the field of event franchising. Actually, these organizations have been created by the various social events.Home based franchising has grown very popular in the field of franchising form of business. Most people are willing to switch on to home-based franchising, because, for them, it is easy to operate this kind of franchising business. Moreover, home based franchising need lower investment; rather, it should be state that home based franchising focuses on the minimum of investment of money. But, in the field of choosing this type of franchising business, one may face various problems and challenges, that is, you have to get fully engaged in your business. If the atmosphere of your home is not suitable for your business, then you have to face too many difficulties. Over and above, if one’s home is small, it will be very tough for him/her to continue the franchising business. Besides, there may also be the children who can disturb you while involved in your business. There may be the existence of other problems too.

Companies developing their business world with help of franchising format of business in the United States of America:

There are several companies all over the world which are getting swelled by the increase of their business profits with the help of the franchising form of business. The companies in the United States of America experience the golden presences of so many companies which are habituated to increase the organizational benefits with the help of franchising business, such as Subway, McDonald, 7 Eleven, Hampton Inns, H and R Block, Great Clips, Dunkin’ Donuts, Jani King, and Servpro etc. Among these companies, Subway is renowned for sandwiches and salads, and according to the statistics of 2004, it has 22,000

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partners all over the world. McDonald’s includes 37,300 partners according to the 2010 statistics. According to the calculation of 2004, 7 Eleven is partnered by 28,200 members. H and R Block consist of 11,200 partners in 2004. 11,000 partners contribute to the development of the business of Jani King., a commercial cleaning.

The management fee and the front-end-fee in franchising:

Over and above, there are also the mid-sized companies, which take the risk of franchising, including, restaurants, gasoline stations, trucking stations and so on. These also require much attention of the persons who are directly related to the world of business. Usually, the fees for trademark, training, and advisory are united into one station, which is designated as the ‘management fee’. But the disclosure fee is always made differentiated from that of the previous one and is called as a ‘front-end-fee’.

Franchising- the leasing opportunity of the proprietorship and not the ownership of the business:Franchising allows us to consider it not to designate it as the ownership of business; rather we can consider franchising as the agreement for running business by using the trademark as well as the brand name of the franchiser for a certain period of time. In fact, after a certain period of time, the opportunity for running business with the help of franchising gets stopped. But, there are also the chances and opportunities for the renewal of the contractual relationship at the end of the contract. Both of the parties may also terminate from the business using certain types of rules and regulations as imposed on them by the authorities of the related area. So, it is clear that there are various regulations in the various localities; these rules and regulations vary in nature as well as the location of the agreement or contract.

Franchising- a waste asset of business world due to limited ‘life-span’:

A franchising form of business usually lasts from five to thirty years of expansion. I may be canceled at the premature time period of business. It provides the business organizations, who are subjected to the capability of becoming franchisee in order to develop their marketing profits in the business world, with the chances and opportunities not for buying the business from the franchiser, but for running the business with the help of leasing opportunities. The license-period of franchising lasts within a certain period of time. In this respect, some critics of business designate franchising as the ‘wasting asset’. Yes, the time period of franchising business is finite. For the limited life-span of franchising business format, there are so many critics who are habituated to comparing this form of business with those of the comets in the sky, exploring the beauty of the sky as well as venturing a new horizon in the field of astronomical research with the help of certain changes and revolutions in the solar system.

Franchising form of business allows a minimum of risk for the franchisers with the help of spreading their businesses all over the world:

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The profits of the franchisers depend upon the fact with how much efficiency the franchisee is working. The working status of the franchisees influences much the profitability of the franchisers. Over and above, the franchisers have to bear with the minimum of risk regarding the spreading of their business, including in the light of financial perspective. And, this is obviously an extra benefit for the franchisers. Thus, they are capable of spreading their businesses all over the world as well as attaining market profits from the business. There are the small firms as well as the start-ups which may get involved into franchising form of businesses. Individuals can also take the advantages of running their businesses with the help of the franchising form of business.

The inter-relationship between the franchiser and the franchisee in the light of the full control of the franchising business format in the hands of the franchisers:

In a franchising form of business, both the franchiser and the franchisee depend upon each other in spreading their businesses as well as gaining profits from these. First of all, the franchiser is responsible for designing the business criteria which will be provided to the franchisee. There are also the liabilities of the franchiser that the schemes and techniques of the business should be properly planned as well as rectified. The responsibility of the franchiser lies also in the fact that the franchiser will have to provide the franchisee with every scope for running the business, such as, the promoting and upgrading of business, marketing of the products or services to be provided to the customers, merchandising, and proper arrangement of the training which should be able to make the employees of performing the tasks in a proper way etc. The responsibility of the franchisee lies in the fact that the franchisee should always be ready for the financial support as well as the marketing effort which should be applied for increasing the business profit. The franchisees have to go forward according to the prescriptions made by the franchisers. The uniforms of the staffs of the franchisees should also be designed according to the plans and programs of the franchisers. The franchisers also have to mention their trademark, signatures, logo of their business or companies, and so on.Thus, it is measured that the franchisees are not the sole owners of the business format of franchising, although the franchisees have also the right to plan for the marketing strategies of the business organization with the franchisers.

Franchisees should be well-protected by the franchisers and vice versa:

As the franchisees provide the franchisers with all the financial supports, these are the duties and responsibilities of the franchisers that they should properly guide the franchisees in every respect of running the business. The franchisers should be handling the fact so that there is not any entrance of any third party regarding the trademark or brand name of the business of the franchisers. The trademark or the brand name which is provided by the franchisers should be free from any legal oppositions or disputes so that the franchisees may not suffer anyhow. A legal attorney or lawyer may be required to protect the franchisees regarding the legal matters. In the agreement copy, the franchisers should also include the name of the locality or country where the agreement is being accomplished or the name of the place for which the franchising business format should be strictly followed. The responsibilities of the franchisees also remain in the fact that

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they should properly follow the part and parcels of the agreement issued for franchising form of business. Most often, the franchisers demand for the signatures of the franchisees, and the franchisees should also maintain this formality for balancing up the harmonious relationship in the franchising business.

Certain eligibilities of the franchisers:

Though there are various rules and regulations regarding the eligibilities of the franchisers, yet there are some common rules in respect of the eligibilities of the franchisers.

In order to acquire the franchisers’ status, the franchisers should submit all the required documents to the concerned authority, mentioning the experience of the franchisers in the related business, the list of the goods or services to be provided by the franchisers, the amount of the franchising fee, and so on. The franchisers should also state whether they have been subjected to any type of legal disputations or problems. A franchiser should also provide all the required information regarding the trademark or brand name of the goods or the services to be provided to the franchisees as well as state the fact whether the goods or services to be supplied by him/her have met any third party interferences or legal disputes. Over and above, the franchisers should also mention that the goods or services to be provided by them are of proper registration as well as usage. The franchisers should also include that they are capable of handling the administrative section of the franchising format of business, that is, they will be able to provide the training to the franchisees. The pervious reports of franchising businesses should also be produced for attaining the eligibilities of becoming a franchiser. It is also a fact that the franchisers should mention how much successful they were earlier as franchisers. Moreover, there are also some localities where the regulation on franchising business lies in the fact that the franchiser should refund the franchising fees at the end of the license of the franchising format of business as well as at the time of cancellation of the premature agreement. Yes, if both of the parties are willing to close the chapter of franchising the business, the franchiser should refund the franchising fees which were paid at the beginning of the business.In the agreement, the object with the help of which franchising business is going to be aimed at should also be mentioned. Over and above, the terms and the conditions of the agreement should be clearly stated in the agreement copy. The time period for which the agreement is going to be prepared should also be mentioned. Besides, the agreement copy should also follow the various duties and responsibilities to be strictly followed by both the franchisers and the franchisees.

For India, the Contract Law 1872 and the Specific Relief Act 1963 cover the rules and regulations to be followed by the franchising business. From the very outset of the civilization in India, the franchising format of business has been running successfully by various organizations. Sometimes, it has occurred that there is the existence of the foreign companies in India for achieving their marketing profits with the helping hands of franchising business. You can see McDonald’s for instance. This company is running successfully with the franchised business.

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Thus, the franchising form of business has acquired also a form of joint venture business profile.

Why should one switch on to franchising the business? (In the perspective of the various advantages enjoyed by the participants of the franchising):

But, the question may trouble all of us why one should click to the franchising distribution system of business. It is the fact that there are so many forms which can be used for the sake of increasing one’s business, whether in the filed of the small firms or take for the larger organizations. What are the special traits of franchising that makes one choose this particular form of business?The answer lies in the very discussion above, and this one can summarized thus, which is helpful to trace on the various advantages or plus points of the franchising:

In franchising, there is the advantage of the existing fame of the trademark or the brand name of the franchiser. It is a fact that the goodwill of the franchiser’s trademark is helpful in increasing the sale of the franchisees, thus building the ground for the future. Customers are generally drawn towards the renowned brand name or trademark. There are several brands or trademarks the products of which the customers prefer to purchase. So, franchising is very much effective for the start-up of a new business.

Over and above, while franchising a business, a franchisee is facilitated with the advantage of proper training as well as useful schemes and techniques provided by the franchiser.

Franchising a business is also helpful in saving your time. In the field of franchising form of business, the franchiser has already set up the

business, as a consequence of which the franchisee gets the advantage of a ready-made ground for running the business. Besides, the franchisee also gets benefits of lower range of investment in the business while for the start-up of a new business, the monetary investment as well as manpower matter much.

Another important point is that franchising belongs to the larger group of business organizations through the networking chain or the distribution system. So, while franchising a business, one has to bear up with the minimum of risk related to the business. It is the fact that none has to tolerate the risk on a single shoulder. The duties and responsibilities are shared by various members of the group of business.

A franchising form of business leads to a giant-like store-house of sales activities, thus increasing the amount of profits from the business. Actually, franchising forms a larger group of business, and so there is the opportunity of spreading the business into the larger groups of the society as well as the growth of profitability.

As franchising is the part of a networking system in the business world, the duties and responsibilities of the business are carried out by each and everyone.

In franchising form of business, there are two distinct groups- one is that of the franchiser, and the other is of the franchisee, thus focusing individually on the various parts of production and labor respectively. The advantage lies in the fact that there is not the mixing up of the two divisions, as a result of which, the

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harmonious relationship between the production unit and the labor unit of a business organization remains steady.

Franchising is based on the foundation of an ideal agreement between the franchiser and the franchisee. This agreement consists of the various rules and regulations regarding franchising, duties and responsibilities of both of the parties, and obviously the object of franchising etc. Thus we see that the agreement for franchising a business is the keyword to leading a relationship of mutual understanding between the franchiser and the franchisee.

Franchising is formed of a larger group of a networking system. There are so many members in this chain, but, as the duties and responsibilities are distributed, problems are being attempted to be solved with much ease and comfort as well.

Thus, one may get interested in franchising a business. These are the very causes why franchising a business has become so popular as well as why most business persons switch on to franchising a business. These are the very causes for which many business figures have attempted to modify their business as well as increase their market profits with the help of the golden touch of franchising. These are the very causes for which franchising a business has been adopted in the earlier periods of history of business. Decades have gone, and the business world is getting influenced too much by the helping hands of franchising. Various methods of franchising a business are being invented, thus providing the solid ground for a light-hearted spirit of business.

But, before any franchising commitment, one should keep the following points in mind:

Whether the franchiser and the franchisee are having profitable share in business with the help of franchising.

Whether franchising the business is well-organized or not. How much popularity the franchising is sharing. Whether the franchising has any national acceptance or not, that is, if the law

of the particular province or country does not allow the franchising, it would be of no profit in franchising a business.

How much adaptability the financial control over franchising a business works.

How much franchising a business is faithful, that is, if there is any suppression of facts in franchising of business. Besides, sometimes, it has bees found that there are the hidden franchising fees. This fact should also be kept in mind.

The previous reports about the franchising a business, that is, the reaction of the customers or the public regarding the franchising, should also be kept in mind.

The reasonability of the franchising fees Whether there is any firmness in the commitment of the franchiser. Which type of goods should be franchised from the franchiser

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The fact should also be kept in mind whether the franchiser is capable of keeping the administrative balance.

It is also an important fact while franchising how much success was achieved by the franchiser in his/her business.

Franchising in the light of the opinions and ideas of the franchisers and franchisees:

Franchising format of business development allows much more benefits for both the franchisers and the franchisees. “Franchisees are attracted to this unique form of ownership (or franchise arrangement) because they become part of a larger, established system with a proven track record and trademark, while retaining ownership and some degree of independence, receiving training, expert support, and financial assistance.” (The Business Journal [12th volume] on franchising and entrepreneurship, published in January in the year of 2000, authored by Grunahgen, Marko, Mittelstaedt, and Robert A.)But, it is the fact that almost all the time, the franchisees “deny that their franchise engagement is based on the monetary earning potential. The opportunity to become one’s own boss and the hands on experience as a type of entrepreneurial self-fulfillment, bolstered by the perceived security of the franchiser’s proven business format, trademark, and assistance, is a common justification….”

Small business organizations are taking advantages of the franchising business:

There are so many small farms which are getting involved in the franchising format of enlarging the business as well as increasing the market benefits. “At one extreme franchised small business can be viewed as an expanding form of small business activity whose distinguishing characteristics is its overt and close association with one another and larger enterprise.” (John Stanworth in the Haworth Press in 1995) “The franchised enterprise is, in reality, simply a managed outlet featuring in the corporate marketing strategy of another truly independent business that of the franchiser.” (John Stanworth in the Haworth Press in 1995)

In fact, Stanworth echoes the words of Rubin who made this comment in 1978 in respect of the franchised enterprise along with the independent side of the franchised business organization, whether larger or smaller.

Who are the entrepreneurs?

The entrepreneurs are the persons who are the owners of some idea, and utilizing that idea for the sake of increasing their business opportunities. The entrepreneurs are habituated to take the risk for enhancing as well as enriching the business profits by properly utilizing their idea as well as recognizing the risk for the sake of developing their business opportunities. “Entrepreneurs are individuals who recognize

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opportunities, and are often aggressive change catalysts within the market place.” According to them, entrepreneurs are “considered to go through an entrepreneurial process” which has been designated by Bygrave and Hofer as “the functions, activities, and actions associated with perceiving opportunities and the creation of organizations to pursue them.” (Kuratko and Hodgetts in 2004)

Entrepreneurs take certain risks in respect of running and taking business opportunities:

The entrepreneurs are the persons who are willing to take the risks for the enrichment as well as the increasing of the business growth. The risks they are willing to bear up with are obviously uncertain. Frank H. Knight in 1921 has brought into use of the three types of uncertainties which are tolerated by the entrepreneurs, as following:

Risk, ambiguity, and true uncertainty or Knightian uncertainty are the three types of uncertainties as observed by Frank H. Knight, among which the first one, that is, risk, can be measured in terms of statistics. It is very tough to measure ambiguity in terms of statistics. As for True Uncertainty, it is not possible to have a measurement of it in the statistical terms.

In fact, the entrepreneurs suffer from the true uncertainty while bringing about the revolutionary changes in the field of business. The fact is that the entrepreneurs face this problem of true uncertainty when they attempt to accomplishments of the novelty. It sometimes happens that the entrepreneurs aim at the establishment of something that has never been in the world of business. The true uncertainty occurs here by leading the entrepreneurs in facing the various problems regarding the marketing strategies of their business as well as the planning criteria for attaining the organizational goal for the sake of the attainment of market benefits.History of entrepreneurship:

The term ‘entrepreneurship’ is said to have originated in the 17th and the early 18th centuries in the master hands of Richard Cantillon and Adam Smith for the sake of enriching the field of microeconomics. But, during the 19th and the early 20th centuries, the importance of the term ‘entrepreneurship’ got neglected by so many people until it began to have the nourishment in the flourishing hands as well as enriching intelligence of the economist Joseph Schumpeter in 1930.

The Australian economists such as Carl Menger, Ludwig von Mises, and Friedrich von Hayek etc. have played a vital role in spreading the significance of entrepreneurship by enlarging the chances and opportunities for increasing the scope of entrepreneurship.Schumpeter designated the function of entrepreneurship as enjoying the criteria of ‘the gale of creative destruction’ which is habituated to replace the innovations which are inferior in comparison to those of superior status in the markets or various industries.

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Entrepreneurship aims at bringing about the revolutionary changes in the market place, including the launching of products as well as the introduction of new business models in respect of the industrial development with the help of novelty. Thus, entrepreneurship plays the role of something that attempts to destruct the existing one with the creative tone, that is, entrepreneurship destroys but for the sake of creative urges. These urges or appeals play a significant role in the spreading of the business as well as the development in the field of economic growth.

Peter Drucker on Entrepreneurship:

Peter Drucker has also expressed his views on Entrepreneurship by stating that entrepreneurship leads the persons engaged in these types of business form to the path of taking some risks which are definitely uncertain. Even, the entrepreneurs are habituated to taking these types of risks in the name of utilizing their ideas for enhancing the market opportunities. They are often unable to understand the outcome of this risk which is tolerated for increasing the economic development.

Entrepreneurship- a theory that aims at bringing the revolution in the field of economic activities as well as development of the business world in connection with the providing the chances and opportunities for self as well as additional employments:

Entrepreneurship is said to have coverage of a wide area of innovation in the field of economic development as well as bringing the chances and opportunities for the self as well as the additional employments. Over and above, entrepreneurship aims at bringing the awareness or consciousness among the people varying in the various classes of the society about the usefulness of entrepreneurship, including the fact how entrepreneurship helps in the development of the economic growth and structure. Entrepreneurship attempts to take the uncertain risks in order to bring the innovations in the field of economic development. In fact, entrepreneurship adds to the charms of economic growth and development. The entrepreneurs are habituated to take these risks for bringing about the revolutionary changes in the field of economic development and growth as well. Over and above, entrepreneurship is related to that of the individual status of business, which is responsible for accomplishing the production as well as the performance of the various functions of an enterprise.

Entrepreneurship attempts to bring the awareness as well as consciousness among the people regarding the fruitfulness of entrepreneurship; this theory of economic development aims at demolishing the backwardness among the people in the society.Many critics prefer entrepreneurship form of business as it focuses on the economic development of the region or locality for which it is working on. Besides, entrepreneurship also stresses upon the fact how to utilize the human potentiality. In fact, manpower is the most important asset of any organization, and this power should be properly utilized for the sake of enhancing as well as increasing the business opportunities by improving the economic growth. Entrepreneurship is a form

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of business that allows us to designate it as the novelty in the field of business world, which initiates the development of business by developing the economic growth.Entrepreneurship attempts to obtain the better economic growth. Over and above, it helps to eradicate the regional imbalances.

Entrepreneurship carries out the social responsibilities of business:

Each and every one of us has the various duties and responsibilities towards our society.It is a fact that any business organization is a part of our society. In this respect, the business organization has also some responsibilities towards our society. It is not that the business organizations should only aim at meeting their organizational goal with the help of increasing the monetary profits. It is the customer who is the main attraction of any business organization, and admittedly, the customer is the part of the society. For this reason, every business organization of today aims at the motto of customer satisfaction by orienting themselves as per the requirement of the customers. There are so many business organizations all over the world which are customer-oriented; they focus on meeting the needs and demands of the customers who vary in sexes, ages, educational and social standard, and financial status etc. Over and above, the taste of the customers also differs according to the climate and jurisdictions of the particular area of manufacturing and running the business.

Besides, unemployment is a thought-provoking issue of today which stirs the feeling of each of us in this present society. Entrepreneurship aims at demolishing the curse of unemployment with the help of arranging for the various types of employment schemes and planning, including the self as well as additional employment.Thus, entrepreneurship is said to have played a vital role in the blotting out of the curse of unemployment as well as carrying out the noble duties of social responsibilities. In this regard, entrepreneurship is also successful in changing the views of the customers about business. Entrepreneurship has brought about a revolutionary change in the filed of carrying social responsibilities. It also plays a significant role by venturing the business world to a new horizon.

Entrepreneurship in the Indian perspective, attained through the caste system in the society along with the religious and traditional background:

In India, entrepreneurship is also an age-old practice of the business. Entrepreneurship originated in India through the caste classification. Actually, there were several castes in the ancient India, varying in religion and occupation. As for instance, the Vaisyas in ancient India is said to have played a vital role in spreading the business all over the country. In fact, the Vaisyas are those who got engaged in the occupation of business. Over and above, the rich culture and tradition of India are also responsible for the enrichment of business as well as increasing the market profits by meeting the organizational goals and activities as well. There was the caste classification in India according to the various occupations in the society, such like, the Brahmins got engaged in the occupation of worshiping the god and goddesses, the

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Kshatriyas got involved in the occupation of fighting in the battlefields as well as the occupations in the field of administration and jurisdiction. The Sudras were involved in the serving the other classes of the society, that is, the Sudras are equal to the labor class of our present society.

The rich heritage of India is responsible for bringing about the revolutionary changes in the field of introducing the entrepreneurship form of business, particularly that of Orissa.The need and demands of entrepreneurship got its immediate popularity in the very locality with the help of the culture and heritage of India.In the background of the second world war, the entrepreneurship form of business gained a new light in the perspective of establishing the new organizations for the sake of increasing the employment opportunities as well as developing the economic growth and stability.

The British motivation for the entrepreneurship form of business for the sake of their own business purpose as well as their satisfaction of the meeting the organizational goals and the customer need and demands:

In India, during the British reign, the rulers got interested in motivating the natives for increasing the development of the economic growth and stability with the help of the infrastructural processing of the entrepreneurship form of business. They attempted to make the people understand that this entrepreneurship form of business could bring about the revolutionary changes regarding the development of their financial status in the society as well as the improvement of the unemployment problem, although almost all the people at that time were engaged in farming or the Ayurvedic treatment. The British thus motivated the Indians to take initiative in the field of introducing the entrepreneurship form of business for the sake of the profits in the market through the helping hands of the economic growth and stability. It made people active in the field of taking certain risks for the development of the entrepreneurship form of business.

David Melelland stressed upon the proper utilization of the entrepreneurship form of business in order to bring about the revolutionary changes in the field of economic stability and growth by maintaining as well as fulfilling certain needs, which are the Need for Power, Need for affiliation, and the Need for achievement. These three needs are very helpful in developing the personality of the entrepreneurs, who can contribute a lot in the crisis of the country by bringing about a revolutionary change in the field of business criteria.

Entrepreneurship in the light of the Socio cultural environment and support system:

There are also some critics who are willing to designate this entrepreneurship form of business as the manifesto of the combination of the ‘socio cultural environment and support system’. Actually, the entrepreneurship form of business aims at developing

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the individual perspective with the help of appropriate training with the aim of improving the financial stability and growth of the society. It is a fact that it is possible to bring about the changes in the individuals with the help of proper training and motivation as well so that the people may get properly groomed a swell as motivated towards the career of entrepreneurship form of business. This form of entrepreneurship business can create the productivity in the human resource. As human resource is the most important asset of any organization, the proper motivation of the manpower can lead to better utility of the social system. Thus, the social scenario can have a revolutionary pick-up, although there are the situational features which greatly influence the entrepreneurship form of business. In this respect, the persons, who are willing to take entrepreneurship as their occupation, should get ready to bear up with the risks, the uncertain risks, in order to be steady in this entrepreneurship form of business; there may be success, and at the same time, failures may knock at your door.

In this context, we can sum up some characteristic features of an entrepreneur. The most featuring nature of an entrepreneur is that he/she should be of tolerating the hardships or difficulties arising in the prospect of entrepreneurship form of business. An ideal entrepreneur should be of determined nature, but, at the same time, he/she should also be patient. An entrepreneur naturally gets dissatisfied with the daily activities; there should be some innovative as well as creative feature of taking responsibilities for providing assistance to the group or enterprise, that is, the entrepreneur should have the leadership quality for which the other members of his team get motivated for adopting the entrepreneurship form of business as the career.Over and above, an entrepreneur should be future-oriented as well as having the attitude of facing the adverse situation with cool and calmness, that is, the entrepreneur should handle all the adversaries with the take-it-easy manner. He should also be able to rectify the opportunities for the enrichment as well as the increasing of the business and economic growth and stability. Yes, the entrepreneur should be opportunist regarding the growth and development of his/her business.

Entrepreneurship in the perspective opinion presented by the business journal published in January in the year of 2000, authored by Marko, Robert A. Mittelstaedt, and Grunahgen:

This business journal explores the fact regarding the entrepreneurship form of business with the help of the valuable thoughts of Livesay, who “calls an individual who perceives a market opportunities and assembles the assets necessary to exploit it an entrepreneur.” (Livesay)According to another exposing of the facts about entrepreneurship by this business journal is the explanation of entrepreneurship in the words of McClelland in 1961. Accordingly, “McClelland’s seminal work maintains that a strong achievement motive is what tends to drive the individuals to become entrepreneurs.” (The Business Journal on Franchising and Entrepreneurship, published in January in the year of 2000, authored by Grunahgen, Mittelstaedt, Marko, and Robert A.)

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Following this opinion of McClelland, Palmer, in the year of 1970-71, draws the conclusion that entrepreneurs are not habituated to work in a dedicated way just because of the financial assistance as they take it for granted; instead, they are driven by the intrinsic motivation which leads them to the entrepreneurship form of business.Sometimes, it also happens that the entrepreneurship form of business attracts the persons to become entrepreneurs from the emotional point of view, as in the words of Peterson and Dant, the enthusiasm for choosing entrepreneurship as the profession is the “excitement of running one’s own business.” (Peterson and Dant)Yes, it is the fact that the selection of entrepreneurship as a profession springs from the long-cherished desire of becoming an entrepreneur so that one may become one’s own boss; there is none to supervise over the job.

Franchising vs. entrepreneurship:

There are so many critics who are not willing to appreciate the franchising approach of entrepreneurship. They are not interested in mixing up of the franchising with that of the entrepreneurship. If we summarize the words of Anderson, Condon, and Dunkelberg, we will have the idea that in spite of the consideration of certain franchising researchers that a franchiser takes the risk of an entrepreneur and transforms his unique idea into the business opportunities, there is the other academic literature who strongly opposes to the idea of considering franchisees as entrepreneurs; rather they consider the franchisees as the ‘inferior type of entrepreneurs’. “The most distinguishing characteristic of a small business is its independence of other economic entities, and it is around this point that a crucial debate on the status of the franchised business revolves.” (John Stanworth in the Haworth Press in 1995)

This observation highlights on “the issue of the status of the franchisee in terms of his/her claims to being considered an entrepreneur rather than a manager or quasi-employee. The term ‘entrepreneur’ is not used in any esoteric sense to refer to a highly creative venture based on a new and novel product or service. Rather it is used in more everyday sense and is meant to interchangeable with the term ‘self-employed’ or small businessmen/women.” (John Stanworth in the Haworth Press in 1995).

The fact whether franchising can be designated as the entrepreneurship form of business or not is a controversial issue, stirring the minds of many critics as well as grabbing the attention of so many academic literary figures.There are many critics who are willing to designate the franchising as the entrepreneurship form of business in the sense that franchising allows the franchisees to start-up a new business with the help of the novel ideas which are employed by the franchisees regarding the setting of the business. A franchisee is free to enjoy the various business units related to the labor department as well as every right to market the products of the franchisers under the same trademark or brand name.

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But, on the contrary, the fact should also be kept in mind that there is the pre-designing of the plans and programs in franchising. Yes, the franchisee has to make the schemes and planning prepared by the franchisers effective by hook or crook. So, obviously, the question here gives its ugly head for the critics who are interested to consider franchising as the entrepreneurship form of business. The question arises that if the franchising is the name of the business form where the franchisee is allowed to market the products of the franchiser with the help of the assistance and guidance provided by the franchiser in turn or exchange of a monetary compensation or business revenues paid to the franchiser as royalties, then how can the franchising be designated as the entrepreneurship form of business? It should be noted that entrepreneurship form of business is featured by the characteristics of novelty of the ideas, which are projected into the business, seeking for the business opportunities in order to bring about the revolutionary changes in the field of economic stability and growth.

Over and above, in franchising form of business, the total planning rights are reserved for the franchisers, and there is no scope for the franchisees to explore their novel thoughts and ideas in the field of the business in order to increase the market profit as well as meeting the organizational goal with the help of customer-orientation.

In this regard, there are so many critics and academicians who are unwilling to designate franchising as entrepreneurship form of business.Joel Libava, known as ‘The franchise King’, strongly states that franchising is not the same as that of the entrepreneurship form of business. There is also Rhonda Sanderson, related to the Sanderson and Associates, who is not willing to consider the franchising as the entrepreneurship form of business.

The definition and illustration of the term franchising never allows us to designate it as the entrepreneurship form of business. It is the fact that the characteristically designed features of franchising allow the franchisers to have a command over the franchisees. The franchisees have to carry out the decisions taken by the franchisers in the field of schemes and techniques to be followed for the sake of the development of the business in the market place. Over and above, there is another option which also prevents one from considering franchising as the entrepreneurship form of business and it is that the franchisers that look after the total system of production unit in the franchising form of business. Over and above, the franchisers are given the rights to decide for anything, regarding the various schemes and techniques used for the benefits of the business, training to be provided to the franchisees or the employees, the useful advices regarding the promoting and upgrading of the business products or he services to be given to the customers and so on.

Keeping all these features of franchising into notice, one can not consider it as the entrepreneurship form of business, specially the fact that an entrepreneur is said to possess the unique characteristic of novelty as well as innovative outlook. Many experts have given their opinions that an entrepreneur must be of innovative as well as creative attitude. An entrepreneur takes the responsibilities of the unknown as well

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as the uncertain risks. It means that the entrepreneurship form of business focuses on the very feature of taking risks. But, in the field of franchising, there are the pre-designed assistance, plans and programs, valuable advices, and the various marketing strategies schemed by the franchisers in order to increase the profitability of the franchising business. So, there are obviously the pre-planned programs which enable the franchisees to go forward with an assured sense of gaining profits.

Hence, how can we consider franchising as the entrepreneurship form of business? In fact, there is no scope for applying the novelty or the innovative thoughts and ideas. The franchisees do not get the chances and opportunities for exploring their innovations; here is not the scope for projecting the risk as well as the novel ideas to increase the acceptance of the newly launched business. If there is everything pre-planned, then there is no existence of risk, which is one of the leading features of the entrepreneurship form of business.

Franchising owes much to the ‘parent corporation’ (Mark Sardy and Iian Alon) for its existence. In fact, in the franchising form of business, one party is allowed to enjoy the marketing of the products or services provided by another party. Yes, the franchisees are allowed to market the products under the trademark and brand name of the franchisers in exchange of certain amount of franchising fees.

The opinion of Sardy and Alon are right from the logical point of view as well as the definition of franchising and entrepreneurship. The definition of these two terms as well as the above discussion on franchising and entrepreneurship from the different angles never allow us to consider franchising business as entrepreneurship form.If we closely analyze the various features and characteristics of franchising and entrepreneurship, we will get several arguments which oppose against the designation of franchising as entrepreneurship.

The opinions of Combs, Michael, and Castrovioganni in the year of 2004 also justify that franchising can never be considered as the entrepreneurial form of business. We have to just click to the words of these experts: “Franchising refers to one firm (the franchiser) sells the right to market goods or services under its brand name and using its business practices to the second firm (the franchisee).” (Combs, Michael, and Castrovioganni in 2004)

Thus it is found that franchising business is designed totally on the basis of the franchiser’s planning, programming, decision making, and the franchisees’ experience of the enjoyment of using the trademark and brand name of the franchisers. In this perspective of the features and nature of franchising business, one may never consider franchising as entrepreneurship. It is also surprising how people designate franchising as playing the entrepreneurial role in the business. There is no scope for the franchising business to get the entrepreneurial touch.

The opinion of Hoy and Shane in 1998 also supports the view that franchising business can never be considered to achieve the entrepreneurial form of business. The

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opinion follows as, “A franchise concept is built on replication of a format and uniformity across the system. So, the highly constrained context in which the franchisee operates is assumed to restrict creativity and innovation.” (Hoy and Shane in 1998)

But there are also some critics who are willing to justify franchising as the entrepreneurship form of business:

From the research point of view, “franchising and starting an independent business are part of the same decision process.” (Bradach and Kaufmann)

A franchisee may claim that from the angle of certain demands on the basis of the franchising agreement or contract, he/she has the every right to enjoy the freedom of decision making. A franchiser “would well be advised to appeal to an entrepreneurial prospective franchisee by emphasizing different features of the respective franchise arrangement…..The franchise industry has coined the catchy phrase ‘be in business for yourself, but not yourself’.” (Bradach and Kaufmann)

Over and above, the business journal also expresses its view regarding the fact whether franchising can be designated as entrepreneurship form of business or not. “Emphasizing this philosophy paired with the benefits of ‘hands-on’ experience, becoming your own boss, and self-actualization, to entrepreneurial individuals…….seems promising route.” (The Business Journal on Franchising and Entrepreneurship, published in January in 2000, authored by Grunahgen, Mittelstaedt, Marko, and Robert A.)This business journal, authored by Grunahgen, Marko, Mittelstaedt, and Robert A. published in January in the year of 2000, also states its views regarding the designation of franchising as entrepreneurship form of business that “In future, the research in this area needs………………….to explore the salience and distribution of the phenomenon of a ‘driving philosophy’ among the franchisees.” (The Business Journal, published in January in 2000, authored by Grunahgen, Marko, Mittelstaedt, and Robert A.)

According to the opinions of Grunhagen and Mittelstaedt in 2005, franchising also play the role in entrepreneurship form of business, just because of the fact that, as an individual, the franchisee also gets engaged in the investment for the development as well as the increasing of the market benefits of the franchising form of business. The franchisees are habituated to tolerating the risk of investing in the franchising business.

According to the opinion of Low and Mac Millan, franchisees take the initiative of bringing about the revolutionary changes in the field of business as well as the enrichment of the economic growth and stability by taking the initiative for bearing up with risks for the creation of a ‘new venture’. (Low and McMillan)

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The franchisees are habituated to take parts in the field of the formation of the creation of a unique type of business with the help of the rare or unique planning. In fact, the franchisees help to co-operate with the franchisers to bring their innovative thoughts and ideas into proper way of actualization. Yes, the franchisers dream of and the franchisees make the dreams effective with the help of the realistic touch of franchising the business.

Franchising business is habituated to taking risk in the field of investment:

There are so many critics who are habituated to opine that the franchisees are responsible for taking the financial risk in the field of investing money for purchasing the ownership of the franchising business. There are many firms which are determined to gain the entrepreneurial role in the business by this kind of uniqueness in order to increase the organizational development as well as the economic stability and growth. For these individuals and organizations, franchising is a kind of tool that is used to develop their entrepreneurial contribution in the business.

These thoughts and ideas are assisted by too much confidence and faith by the opinions given by certain experts, as following, “Franchisees do accept the financial risk of introducing the franchiser’s concept to a new and untried market. The franchiser often depends on the franchisees’ local expertise and contacts to venture into a new market and exploit that market’s potential. Thus, franchisees are called on to create idiosyncratic marketing programs that adapt the concept to their immediate environment.”

According to the opinion of Kruger in 2004, the franchisee plays certain entrepreneurial duties and responsibilities in business:

The franchisees play certain entrepreneurial roles in the business, “The franchisees connect the franchisers to different market; help franchisers meet/overcome market deficiencies; help franchisers meet the expectations of the local customers; and supply inputs/resources lacking in the market place to the franchisers.” (Kruger in 2004)

Over and above, there are many experts who opine that franchising business plays a great entrepreneurial role, and these definitions are summed up below:

Franchising “encompasses acts of the organizational creation, renewal, or innovation that occur within or outside an existing organization.” (Sharma and Chrisman in 1999)

Franchising business holds on “about new ideas and turning them into commercial reality.”

Franchisees carry on the “activities connected with owning and managing a business firm.” (Broackhaus in 1976)

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Franchisees are habituated to the “functional management skills and abilities required to start, manage, and develop a small business.” (Gibb and Nelson in 1996)

From the perspective of personal traits:

A franchisee is habituated to possess “qualities of risk taking, leadership, motivation, and the ability to resolve crisis.” These features of the franchisees are required to modify the franchisers’ trend of continuing as well as rectifying the franchising development of business in order to enhance the financial growth and development by meeting the market demands or the customer satisfaction by being customer-oriented.

From the angle of process perspective:

The franchising business allows the franchisees to form an individual form of business enterprise on behalf of the franchiser. In this processing while forming the business enterprise, a franchisee carries on various activities which may definitely allow one to designate the franchisees as playing an important role in entrepreneurship form of business. These activities include the training of the employees the selection of the employees, managing the local laws, comprehension of market competition, and the extent to which the business enterprise is able to gain the market benefits as well as profits for the selling of the products or services to the customers and so on. (Gartner, Low and McMillan)

Thus, we find from the above discussion that there are so many controversies regarding the issue whether franchising may be designated as playing the entrepreneurial role in the business. We have observed on the various opinions of the experts who have sometimes opined for the issue and sometimes, they have expressed their views against this controversial topic.

But, whatever may be the fact, the point should always click to our mind that the very features and nature of the franchising business never allows one to consider the franchising business as playing the entrepreneurial roles. The definitions and nature of franchising business described by various experts do not provide us with the scope for considering the franchising as entrepreneurship form of business. Those who are interested in considering franchising form of business as entrepreneurship should concentrate on the definition and nature of franchising. Franchising is not the ownership of business, but it allows the franchisees to set up the business enterprise on behalf of the franchisers.

This controversial issue waits for more critical observations and studies in the light of researches. If it is possible to discover new identities of franchising regarding its entrepreneurial role, then it will be under consideration of designating this franchising as entrepreneurship form of business. Till then, we have to be satisfied with the franchising qualities of the franchisers and the franchisees.

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Bibliography:

Bradach J. (1997) Administrative Science Quarterly, pages- (42, 276-303)

Broakhaus R. (1976) Proceedings of the Academy of Management, (pages- 457-460)

Bygrave W. (1997) The Portable MBA in Entrepreneurship. J. Wiley and Sons.

Clarkin J. and Rosa P. (2005) Entrepreneurial Teams within Franchise Firms. International Small Business Journal. (Pages-23[3], 303-334)

Combs, Michael, Castrovioganni G. 2004. Franchising: A Review and Avenues to Greater Theoretical Diversity. Journal of Management. (Pages- 30, 907, 931)

Gartner W. (1985) A conceptual framework for describing the phenomenon of new venture creation. Academy of Management Review. (Pages-10, 696-706)

Gibb Y. and Nelson E. (1996). Personal Competences, Training and Assessment: A Challenge for small business Trainers Proceedings of the European Small Business Seminar (Pages- 97-107)

Kaufmann P. and Dant R. (1999) Franchising and the Domain of Entrepreneurship research, Journal of Business Venturing (pages- 14, 5-16)

Shane and Hoy (1996). Franchising: A Gateway to Cooperative Entrepreneurship. Journal of business venturing. (Pages- 11, 325-327)

Sharma P. and Chrisman J. (1999). Toward a Reconciliation of the Definitional Issues in the Field of Corporate Entrepreneurship. Entrepreneurship Theory and Practice. (pages- 23[3], 11-27

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