Research Study

Topics: Franchising / Pages: 6 (1326 words) / Published: May 14th, 2013
Starting a Business
1. What is Franchising? Franchising is a business method of expansion that allows an individual or group of individuals to market a product or a service and to use of the patent, trademark, trade name and the systems prescribe by the owner. Who is the franchiser/franchisor and franchisee? • Franchisor/Franchiser – a legal entity which owns the patent, trademark, method and products or services that allows others to use under his name. • Franchisee – a person or a group of persons who invest, own and operate a business under a licensing agreement granted by the franchisor. Likewise, Franchisee are entitled to: use of the trademark or tradename; market the product or service; have access to pertinent trade secrets; enjoy advertising support, and acquire same benefit from the goodwill of the franchisor. 3. What are the benefits of franchising both to franchisor and franchisee? a. To Franchisor • Business expansion does not require huge infusion of capital because franchisee pays the cost of the new outlet. • It provides franchisor a motivated manager for the business expansion. • Multiple outlets can be established simultaneously even when the business is small. • Provides franchisor an effective method of business expansion that combines limited risk with profit potential and short-run growth with long-term stability. b. To Franchisee • Obtain a working business model and a proven method that is successful for running a business; • Less costly than to establish a single company owned outlet. • There is an on-going support service – the knowledge that while franchisee are in business for themselves. • Acquire a strong marketing and distribution system; • Use of a brand or trademark recognized by customers; • Provided with effective mechanism for achieving deep market penetration and saturation a. Self Assessment of the Franchisee • Examine oneself skills, interest, experiences and educational background/ training that can help in choosing an

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