103-PP16 - Fixtures and equipment assistance • Training...

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© 2011, Educational Institute Chapter 16 Franchising Is Big Business Hospitality Today: An Introduction Seventh Edition (103TXT or 103CIN)
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© 2011, Educational Institute 2 Competencies for Franchising Is Big Business 1. Explain what a franchise is, describe types of franchises, summarize the history of franchising, and explain how franchising works. 2. State common reasons individuals give for wanting to buy a franchise, outline the advantages and disadvantages of owning a franchise, list advantages and disadvantages for franchisors, and summarize other franchising issues.
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© 2011, Educational Institute 3 Types of Franchises Product or trade-name Business format
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© 2011, Educational Institute 4 Why Buy a Franchise? Self management Financial independence Career advancement New skills/training Long-term investment
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© 2011, Educational Institute 5 Advantages for Franchisees Site-selection assistance Credit Construction expertise Fixtures and equipment assistance
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Unformatted text preview: Fixtures and equipment assistance • Training • Opening support • Promotional assistance • Economies of scale • Ongoing support © 2011, Educational Institute 6 Disadvantages for Franchisees • Restrictions • Unwanted products or procedures • Unwanted advertising • Unprotected territories • Cancellation • Inadequate training © 2011, Educational Institute 7 Advantages for Franchisors • Little or no capital required for expansion • Quick expansion possible • Franchisees shoulder investment risk • Unit owners connected to local community © 2011, Educational Institute 8 Disadvantages for Franchisors • They give up the profits generated by the franchise units • They give up some control © 2011, Educational Institute 9 Other Franchising Issues • Encroachment • Financial violations • Contract violations • Mature markets • Outlets in nontraditional locations...
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