Chapter 4 pg 121-129
Franchising agreement: stipulates (specifies) the duties and responsibilities of the franchisee and the franchiser. Benefits of Franchising For the Franchiser ■ The franchiser can attain rapid growth for the chain by sign- ing up many franchisees in many different locations. ■ Franchisees share in the cost of advertising. ■ The franchiser benefits from the investment money provided by franchisees. ■ Advertising money is spent more efficiently (the franchiser teams up with local franchisees to advertise only in the local area). ■ The franchiser benefits because franchisees are motivated to work hard for themselves; the more revenue the franchisee generates, the more money the franchiser makes. ■ The franchiser is freed from all details of a local operation, which are handled by the franchisee. For the Franchisee ■ Franchisees own a small business that has access to big business management skills. ■ The franchisee does not have to build up a business from scratch. ■ Franchisee failure rates are lower than when starting one’s own business. ■ A well-advertised brand name comes with the franchise and the franchisee’s outlet is recognizable because it looks like all other outlets in the chain. ■ The franchiser may send the franchisee to a training pro- gram run by the franchiser (e.g., the Canadian Institute of Hamburgerology run by McDonald’s). ■ The franchiser may visit the franchisee and provide expert advice on how to run the business. ■ Economies in buying allow franchisees to get lower prices for the raw materials they must purchase. ■ Financial assistance is provided by the franchiser in