INTRODUCTION TO

BUSINESSCONCEPT

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THE COMPANIES

TUTORIAL FOCUS

COMPREHENSIVE QUESTIONS

CHAPTER’S OVERVIEW

KEY TERMS DICUSSION

DISCUSSING ACTIVITIES

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Intranets, Extranets,and Private Exchanges

OPEN QUIZ ON CHAPTER 1

What are the basic forms of business ownership?

What is franchising? How many types of franchising?

Why should we buy a franchise?

What should we look for from franchisers?

How to buy a franchise?

What are the advantages of franchising?

What are the disadvantages of franchising?

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KNOWLEDGE SHARING ACTIVITIES

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Questions & Comments???

THANKS FOR YOUR GOOD

PARITICIPATION!!!

BASIC FORM OF BUSINESS OWNERSHIP

FORM OF OWNERSHIP

Sole Trader

Proprietorship

Partnership

General partnership

Limited partnership

Corporation

Private Limited company

Public limited company

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WHAT IS FRANCHISING?

• Franchising: semi-independent business owners pay fees and royalties to a parent company in exchange for the right to sell its products and services under the franchiser’s trade name and often to use its business format and system

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HOW MANY TYPES OF FRANCHISING?

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Trade name

Product distribution

Pure (Business format)OUTLINE

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Figure 4.1 The Franchising Relationship

The Franchiser The Franchisee

Oversees and approves; may choose site

Provides prototype design

Makes general recommendations and training suggestions

Determines product or service line

Can only recommend prices

Establishes quality standards; provides list of approved suppliers; may requirefranchisees to purchase from the franchisor

Develops and coordinates national adcampaign; may require minimum level ofspending on local advertising

Sets quality standards and enforces themwith inspections; trains franchisees

Provides support through an establishedbusiness system

Chooses site with franchiser’s approval

Pays for and implements design

Hires, manages, and fires employees

Modifies only with franchiser’s approval

Sets final prices

Must meet quality standards; must purchaseonly from approved suppliers; must purchasefrom supplier if required

Pays for national ad campaign; complies withlocal advertising requirements; gets franchisorapproval on local ads

Maintains quality standards; trains employeesto implement quality systems

Operates business on a day-to-day basis withfranchiser’s support

Site selection

Design

Employees

Products and services

Prices

Purchasing

Advertising

Quality control

Support

Element

Source: Adapted from Economic Impact of Franchised Businesses: A Study for the International Franchise Association, National Economic Consulting Practice of

PriceWaterhouseCoopers, (IFA Educational Foundation, New York: 2004), pp. 3,5.

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WHY BUY A FRANCHISE?

• Franchisees are buying the franchiser’s experience

• “Going into business for yourself but not by yourself”

• Franchisees get a proven business system and avoid having to learn by trial-and-error

• Before buying, ask: “What can a franchise do for me that I cannot do for myself?”

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WHAT SHOULD WE LOOK FOR FROM FRANCHISERS?

• A unique concept or marketing approach

• Profitability• A registered trademark• A business system that works• A solid training program• Affordability• A positive relationship with

franchisees

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HOW TO BUY A FRANCHISE

• Evaluate yourself – What do you like and dislike?

• Research the market• Consider your franchise options• Talk to existing franchisees• Ask the franchiser some tough

questions• Make your choice

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WHAT ARE THE ADVANTAGES OF FRANCHISING?

• Management and marketing assistance

• Personal ownership• Nationally recognized name• Financial advice and assistance• Lower failure rate• Standardized quality of goods and

services• Site selection and territorial

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WHAT ARE THE DISADVANTAGES OF FRANCHISING?

• Large start-up costs• Shared profit• Management regulations• Coattail effects• Restrictions on selling• Fraudulent franchisers

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