Management Entrepreneurship

A disadvantage of the direct ownership system used by early manufacturers in the 1830s like McCormick and Singer was the lack of direct control and control over quality levels.

Franchising dominates the Quick Service Restaurant segment of the U.S.economy.

McCormick and Singer were two of the first franchises in America during the 1800s.

Franchised businesses directly produce almost 6 million jobs.

Nearly 50 percent of all U.S.businesses are franchised.

Automobile manufacturers have franchisees.

Making products available to consumers through exclusive dealers in a specific geographic region is the purpose of product-distribution franchising.

Product-distribution franchising is commonly used in fast-food restaurants and lodging establishments,such as hotel and motel chains.

In comparison to business-format franchising,product-distribution franchising is more of a turnkey approach to franchising.

The biggest advantage of franchising for a franchisee is the marketing expertise that is provided.

Some franchisors prefer that their franchisees not have experience in the particular field of the franchise.

Local franchisees share in the advertising costs spent by the franchisors when advertising nationally and/or regionally.

Franchisors seldom provide financial resources for startup and working capital for inventory.

The primary drawback of franchising to the franchisee is that you must give up some control,some decision-making power,and some freedom.

One advantage of franchising to the franchisee is that it is relatively easy to terminate a franchise agreement if things are not going well.

If a franchisee feels that a product,promotion,or policy may not be appropriate for his/her area,the franchisee can decide to not participate.

A right of first denial states that a franchisee must decline continuing a franchise agreement before the franchisor can offer the franchise to someone else.

From the perspective of the franchisor,one of the biggest advantages of offering franchises is the expansion of the business happening much faster than if the franchisor were in business alone.

Franchisors often have several sources of income built into franchise agreements,including franchise fees,operating revenue percentages,and product/supplies revenues.

One way in which franchisors have dealt with the complexity of serving differing customer tastes covering large geographic areas is through company owned franchises.