Hostel Franchising: a Pathway to Expansion

Topics: Franchising, Business model, Marketing Pages: 11 (3126 words) Published: August 23, 2013
Title: Hostel Franchising: a Pathway to Expansion
Assignment topic
Franchisors are innovative and entrepreneurial. Businesses wishing to profitably and successfully grow need to understand that franchising enable firms to expand more quickly and into more markets than they could otherwise manage. Word count: 2724 words.

Executive summary
Creating a franchise starts with the customer. The franchisor needs to identify potential customers and produce a business format which will meet their needs and create wealth for both the franchisor and the franchisee. This paper proposes a strategic planning for a franchise system of a hostel. First, it provides a brief description of the latter. Then, it analyses the major factors that the hostel shall consider when embarking in franchising. This is followed by crafting a franchise system strategy with respect to some aspects of the franchisor-franchisee relationship. Finally, the paper gives clear arguments into a final position to extern why franchising is appropriate and relevant for the hostel to create wealth.

Table of contents
1. Introduction……………………………………………………………………..…...…3 2. The hostel…...………………………………………………………………….............3 3. Franchising: major factors of consideration…………………………..…………..……5 4. Deployment strategies ………………………………...……………………………….6

4.1 Real estate issues …………………………………………………………...…..6
4.2 Selecting and monitoring franchisees ………...………………………………...7

4.3 Marketing issues …………………………………………..……………………8
4.4 Financial analysis……………………………………………………………….9 4.5 Franchisee-franchisor relationship dynamics………………………………….10

5. Conclusion……………………………………………………………………………11

References………………………………………………………………………………..12

1. Introduction
Franchising is, at its core, an entrepreneurial alliance between two organizations, the franchisor and the franchisee. This alliance can only come into reality when a successful company store has been established, a franchise appointed, and then both the franchisor and the franchisee seek to exploit the opportunity in a joint venture operation to create wealth for both (Spinelli, Rosenberg and Birley 2004). In this context, the purpose of this paper is to propose the expansion of a hostel by franchising. The latter is indeed an entrepreneurship act where opportunity is an obsession, the approach is holistic and leadership is balanced – for the purpose of wealth creation (Spinelli, Rosenberg and Birley 2004). The paper has four sections. First, I will provide a brief description of the hostel, mentioning the services and the processes involved with it. Then, I will state and analyse the major factors that the hostel shall consider when embarking in franchising. This will be followed by crafting a franchise system strategy with respect to some aspects of the franchisor-franchisee relationship such as real estate issues, marketing issues, selecting and monitoring franchisees, financial analysis and relationship dynamics. A highlight will be given in the latter to stress how potential conflicts in the franchise relationship should be minimised in earlier and later stages of the partnership. The conclusion will give clear arguments into a final position to extern why the proposed franchise system is appropriate and relevant for the hostel to create wealth and accomplish its goals. 2. The hostel

The hostel’s name is Pele, an allusion to the greater Brazilian soccer player ever. The “product” offered by it is a major service with accompanying minor goods and services (Kotler et al. 2009). Its core business is located in the heart of the “Pampulha” neighbourhood, in Belo Horizonte, Brazil.

Pele Hostel targets a segment based on life stage (demographic segmentation) (Kotler et al. 2009). This segment is comprised by young travellers seeking for a cheap, comfortable and safe place to stay as well as an accommodation where they can meet different people and party. The accommodation has...

References: Barber, N & Goodman Jr., R 2011, “A strategic approach to managing customer service quality”, Journal of Service Science, vol. 4, iss. 2, pp. 17-32.
Brazilian data, viewed 9 June 2013, .
Hill, CWL 2010, Global Business Today, 7th edn, McGraw Hill, Boston.
Kotler, P, Keller, KL, Ang, SH, Leong, SM and Tan, CT 2009, Marketing Management: An Asian Perspective, 5th edn, Singapore, Prentice Hall.
Rugless, R 2003, “IFA: Communication key ingredient in fruitful franchise relations and Liddle”, Nation’s Restaurant News, February 24, 2003.
Spinelli, S, Rosenberg, RM and Birley, S 2004, Franchising: Pathway to Wealth Creation, Prentice Hall, Upper Saddle River, NJ.
Thompson, AA, Strickland, AJ and Gamble, JE 2012, Crafting and Executing Strategy: The Quest for Competitive Advantage, Concepts and Cases, 18th edn, New York, McGraw-Hill.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay about Franchising
  • Essay on Franchising
  • Franchising Essay
  • franchising project Essay
  • Essay on Franchising
  • Franchising Essay
  • Franchising Essay
  • Essay on Franchising

Become a StudyMode Member

Sign Up - It's Free