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Lecture 17

GEB4113 Lecture Notes - Lecture 17: Franchising, Franchise Disclosure Document, List Of Internet Entrepreneurs


Department
General Business
Course Code
GEB4113
Professor
Denslow
Lecture
17

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Entrepreneurship Franchising
Franchises appear in 300 different industries
Franchises dominates several industries like restaurants and hotels
Franchises are barely present in some industries including driving schools
Definitions you need to know
o Franchising - a system revolving around a two-party agreement, whereby the franchisee
conducts business according to the terms specified by the franchisor
o Franchisee an entrepreneur whose power is limited by a contractual agreement with
franchisor
o Franchisor the party in the franchise contract that specifies the methods to be
followed and the terms to be met by the other party
The Pros and Cons of Franchising
o Advantages
Probability of success
Proven line of business
Pre-qualification of franchisee
Training
Franchisor-provided
Financial Assistant
Operating Benefits
Widely known
Proven marketing
o Limitation
Franchise Cost
Initial franchise fee
Investment cost
Royalty payments
Advertising cost
Loss of independence
Lack of franchisor support
Sole supplier
Termination/renewal clauses
Franchisor Controls on Franchisees
o Restricting of sales territory
o Requiring site approval and imposing requirement on the outlet’s appearance
o Restricting the goods/services that can be sold
o Requiring specific operating hours
o Controlling advertising
Evaluating franchise Opportunity
o Selecting a franchise opportunity
Personal observation
Advertisements
o Investigating the potential franchise
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