The requirements are
A literature search to answer one of the following research questions:
(1) What are the advantages and disadvantages of conversion franchising as an international strategy for business format franchising?
(2) What changes have there been to international fast-foodbusiness format franchising over the past 25 years?
(3) In what businesses sectors has there been significant growth in business format franchising in the 21st Century, and why?
In addition,debateat least three of the key business format franchise concept That is, any three of:
Franchisability, pilots, manuals, location/territories, initial support, ongoing support, fees, contracts, marketing, franchisees, international strategy, etc
Document the literature search process as an appended chart or table.
What are appropriate sources of literature?
Appropriate literature includes: journal articles, conference proceedings and business books. The quality and variety of the literature will influence theoverall grade of the report.
You should document your literature search process and append it to your report.
The format of the paper is a report format.
One article to be used.
Duckett, Brian. (2008).Business format franchising: a strategic option for business growth at home and abroad, Strategic Direction, 24(2) p. 34.
Viewpoint by: Brian Duckett Managing Director at Howarth Franchising, Reading, UK.
Franchising continues to grow as a method of doing business around the world. Just about any business that operates through a branch network could benefit from considering franchising as a development option. In simple terms, the advantages include quicker growth through more highly motivated operators, using someone else’s money and effort, to open and run the outlets. In addition to opening new branches, franchising can be used to convert managed outlets tofranchises by turning staff into franchisees. This approach has often been proven to reduce overheads and increase efficiency because the manager has an increased personal incentive to provide better service and make the business more profitable.
Another form of conversion franchising involves turning competitor outlets into franchisees. By doing this, the franchisee reaps the rewards of using the franchisors name and system, and the franchisor can enter a new geographical area by identifying a site and an operator as well as eliminating a competitor all at once.There are successful franchisors in many business sectors ranging from hotels, car-hire and restaurants, real estate agents, printers and sign-makers, to childrens education, beauty parlors and elderly care. How else would McDonalds, Holiday Inn, Dominos Pizza or Budget Rent-A-Car be where they are around the world today? Or how would the major fashion retailers have a presence
in most major cities and airports?
How does it work?
Put simply, franchising is a commercial relationship in which one party allows the other to operate clones of a proven business system in return for initial and ongoing fees. The fee level varies greatly depending on sector but, in all cases, the amounts paid must be a fair reflection of each party’s investment in the operation.
The process starts with a proven and successful business system, which can be easily learned by other people, operated in outlets, which can be simply acquired and converted. It must also be profitable enough for both parties (the franchisor and the franchisee) to make a good return on their investment. A recognized name, protected by the relevant trademarks, is also a pre-requisite.
The business systemmust also be supported by excellent training facilities and management reporting processes, which make it easy to track progress and put things right if they start to go wrong. Whilst the franchisor-franchisee relationship is, out of necessity, governed by a detailed legal agreement, it is far more important to deal with operational issues that arise by discussion and negotiation than getting lawyers involved. It helps to have, or develop, a culture that is co-operative rather than dictatorial.
In its home market, a business may choose to have individual franchisees operating one or more separate outlets. Internationally it is more common to give the franchisee responsibility for developing a whole country, or at least a region of it, either by opening and operating a number of branches or sub-franchising to others. There is no generic right way to franchise a business, but experienced consultants can help to assess whether there is a right way for a particular business, whatever its current size.
In all cases, it is necessary to have a very clear profile of the individual, or indeed company, which will make the best partner to work with and the selection criteria must be rigorously adhered to. If the vision is to build a national, international, or even global brand then it is not just a question of accepting the first applicant with the money. The required knowledge, skills and attitude to properly operate the system and achieve mutually agreed development schedules, are equally, if not more, important.
Maintaining standards: Operation standards for business systems throughout the network are clearly laid down in the Franchise Operations Manual, which is used both as a training tool and a referral document during site visits, review meetings or even disputes. Everything that has to be done, by whom, to whom, how well and how often, is detailed in the manual and thefranchisor can make amendments and adaptations when necessary. Many franchisors also now put their manual online, secured by various password protections. This makes it much easier to ensure that every unit is operating as it should, wherever it is in the world, and that all staff are properly trained to deliver the relevant products and services to the end-users. The manual is the storehouse of the franchisors expertise and know-how and is therefore an extremely valuable document. Its preparation often highlights areas of the existing business, which can be improved.
Diversifying into franchising
Existing businesses can also grow by diversifying and becoming franchisees, either by opening some outlets of an existing franchised network or acquiring the exclusive rights to operate an overseas system in their home market. For example, car dealers Gowrings chose to become Burger
King franchisees, opening and operating several units in the UK, while brewers Whitbread acquired the rights to operate TGI Fridays restaurants.
Becoming a master franchisee, which means piloting and proving a system can successfully transfer to a new market then sub-franchising the operation of outlets to others, is another way to diversify into franchising. This is how, for example, the Dominos Pizza, KallKwik printing and Cartridge
World retail networks have grown.
Franchising is becoming one of the most popular methods for growing a business, particularly if international growth is an objective. It should be seriously considered by any business which operates through a network of outlets. Established franchised networks are becoming private equity fund and listed company acquisition targets, particularly in the USA, UK and Australia, so franchising can also be the route to a more lucrative eventual exit.
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