Describe the advantages and disadvantages for Applebee’s to franchise, as a franchisor.
Listed below are the advantages:
* Obtain operating efficiencies & economies of scale
* Increase market share and build brand equity
* Rapid growth and development
* Lower dependence on own capital for growth
* Reach the targeted consumer more effectively through corporative advertising and promotion * Build customer loyalty
* Sell products & services through a distributor or network * Replace the need for internal personnel with motivated owners/ operators * Transfer of risk
Listed below are the disadvantages:
* Loss of potential profits
* Dealing with difficult franchisees
* Potential loss of business control
* Potential loss of business goodwill
* Creating a potential competitor
* Revenue loss through fraud
Explain the factors that made Applebee’s a suitable candidate for franchising due to its nature of industry.
The factors are local production in limited geographic markets, physical locations are helpful and industries involving local knowledge.
Being a restaurant chain, it makes perfect sense for applebee to be franchised as this allows them to offer their food and dining experience at a variety of locations. This is also effective for applebee to increase their pool of customers.
Franchising is also suited for applebee as the food and dining experience is provided to customer in a set location.
Finally franchising allows local applebee’s franchisees to provide information about needed food/service adaptations to the market. As owners, franchisees also profit from adapting products/services to meet the needs of local markets. Thus they have stronger incentives to do so than hired employees.
1. Physical location
Goods and services are provided to end-customers at a location 2. Brand name: Important competitive advantage
Effective to differentiate themselves
3. Outlets not...
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