Chapter 1 - History and Overview

8/11/2019 Chapter 1 - History and Overview

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FRANCHISING

HISTORY AND OVERVIEW

Leslie Andaya


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FRANCHISING

A business opportunity

which the owner of a service or a

trademarked product grants exclusive

rights to an individual

for the local distribution and or sale of

service or product

and in return receives a payment or royalty

and conformance to quality standards.


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FRANCHISE AGREEMENT

FRANCHISOR FRANCHISEE

Owns product, trade mark or

trade name

Provides support

Uses product, trademark or

trade name

Expands business withfranchisors support

Receives fees Pay fees


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3 MAJOR COMPONENTS OFFRANCHISE ARRANGEMENT

PRODUCT

OR SERVICE

ROYALTYFEE

TRADEMARKAND LOGO


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TYPES OF FRANCHISING

PRODUCT ANDTRADE NAME

BUSINESSFORMAT


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Use franchisors product, service, and

trademark and also the complete business

method to conduct the business itself.Examples:

BUSINESS FORMATFRANCHISING

Fast food

Service

Restaurants

Building and Construction

Business Services

Retail

Automotive

Maintenance

Retail-food

Lodging


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HISTORY

OFFRANCHISING


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Franchising in the 1800's

"FRANCHISE" is a French derivativemeaning privilege or right.

Isaac Merritt Singer, founder of I. M.Singer & Companycharge licensing (or

franchise) fees to business people who

would own the rights to certain

geographical areas. He had created a

network of dealers.


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Coca-Colaintroduced franchising into itsmanufacturing and bottling areas to

reduce financial risk and gain market

share.

Automobile manufacturerscreated anetwork of licensed dealerships to sell and

service their vehicles.



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Oil companieslatched onto thebusiness concept to create gas and

service stations to keep those cars

moving.



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Franchising from 1950-1990

Convenience goods and services

McDonald's, Kentucky Fried Chicken,laundry services, dry cleaners, hotels, andrental car franchises


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Federal Trade Commission (FTC) passed

Rule 436.1, Franchise Disclosure Actcreation of disclosure document which

provides information about the franchisorand franchise system to the prospective

franchisee.

(UFOC) Uniform Offering Circular

(FDD) Franchise Disclosure Document

Franchising from 1950-1990


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Franchising in 1990s and the

Millennium Multi-unit franchising has emerged to play

a significant role. No longer content to

operate a single standalone franchise unit,many savvy and aggressive franchisees

have opened up several units, and some,

even several different brands.


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The franchising boom results of 2 major

trends:

The desire to start a business of my own

The change in lifestyle put growing

emphasis on service and convenience


Millennium


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Conversion Franchisingowner of anexisting business becomes a franchisee to

acquire some benefit from association withthe franchisor.

Examples: Century 21

RE/MAX


Millennium


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WHATS HOT RIGHT NOW?

http://www.entrepreneur.com/fran

chises/toptenlists/index/html/
http://www.entrepreneur.com/franchises/toptenlists/index/html/http://www.entrepreneur.com/franchises/toptenlists/index/html/http://www.entrepreneur.com/franchises/toptenlists/index/html/http://www.entrepreneur.com/franchises/toptenlists/index/html/


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TOP 10 FRANCHISES OF 2014

Anytime Fitness

Hampton Hotels

Subway

Supercuts

Jimmy John's Gourmet Sandwiches

7-Eleven

ServproDenny's

Pizza Hut

Dunkin' Donuts


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TOP HOME-BASED FRANCHISEOPPORTUNITIES IN 2013

Jan-Pro Franchising Int'l. Inc.

System4

Vanguard Cleaning Systems

Snap-on Tools

Jazzercise Inc.

Cruise Planners-American Express Travel

Anago Cleaning Systems

Matco ToolsChem-Dry Carpet & Upholstery Cleaning

CruiseOne


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TOP TEN FRANCHISES WITH START-UPCOSTS LESS THAN $50,000 IN 2013

H&R Block

Jan-Pro Franchising Int'l. Inc.

System4


Jazzercise Inc.


Anago Cleaning Systems

Chem-Dry Carpet & Upholstery CleaningCruiseOne

Novus Glass


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TOP NEW FRANCHISES FROM

FRANCHISE 500 IN 2013

Kona Ice

Menchie's

Orange Leaf Frozen Yogurt

ShelfGenie Franchise Systems LLCBricks 4 Kidz

Smashburger Franchising LLC

GameTruck Licensing LLC

Paul Davis Emergency ServicesSignal 88 Security

Mac Tools


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FASTEST GROWING FRANCHISESFROM THE FRANCHISE 500 IN 2014

Subway

7-Eleven Inc.

Mac Tools

Jan-Pro Franchising Int'l. Inc.Dunkin' Donuts



Jimmy John's Gourmet SandwichesGreat Clips

Pizza Hut Inc.


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TOP TEN U.S. FRANCHISORS SEEKINGFRANCHISEES OUTSIDE THE UNITED

STATES IN 2013

7-Eleven Inc.

Subway

Hampton Hotels

Kumon Math & Reading CentersMcDonald's

KFC Corp.

Jiffy Lube Int'l. Inc.

Pizza Hut Inc.Baskin-Robbins

Anytime Fitness


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RETAIL FRANCHISING

SOME POPULAR BUSINESS

FORMAT FRANCHISES


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REATAURANTS RETAIL LODGING HEALTH &BEAUTY

BUSINESSSERVICES

KFC

McDonalds

Pizza Hut

Taco Bell

Blockbuster

Video

Radio Shack

The Athlete's

Foot

GNC

Franchising

Choice Hotels

Bass

Hotels/Holid

ay Inn

Marriott

Hotels

Merle Norman

Cosmetic

Studios

Supercuts

Jenny Craig

International

Cost CutterFamily Hair

Care

Mail Boxes

Etc

H & R Block

ACE America

Cash

Express

Kwik Copy


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MAINTENANCE/CLEANING

AUTOMOTIVESERVICE

EDUCATION/TRAINING

REAL ESTATE CONVENIENCE

Jani-King

International

The

ServiceMast

er Company

Merry Maids

Meineke

Discount

Muffiers

AAMCO

Transmissio

ns

MediasInternational

Precision Auto

Care

Dale Carnegie

Training

Barbizon

School of

Modelling

Berlitz

InternationalSylvan

Learning

Systems

Century 21

RE/MAX

Internation

al

Coldwell

Banker

ResidentialAffiliates

7-Eleven

Family Mart


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28%

34%

38%

43%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1975 1990 2000 2010

Growth of Franchise sales as a % in total retailsales

Franchise sales as a % in total retail sales


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INTERNATIONAL

FRANCHISING


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The success and failure of franchising ininternational markets depends on the ff:

franchisors success in domestic competitive

position and market penetration

ability to expand based on its knowledge and

expertise ability to adapt to countries that have cultural

and language differences, transcend economic

and political distinctions as well.


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MICROVIEW OF

FRANCHISOR-FRANCHISEE


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FRANCHISOR


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DEMOGRAPHIC TRAITS OF CEO

AGE MEN WOMENEQUITY

POSITION

FOUNDEROF THE

FIRM

YEARS INFRANCHISECOMPANY

YEARSHELD THEPOSITION

48.8 y/o 94.2% 5.8% 86% 47.7% 10.4 yrs. 8.1 yrs


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FRANCHISEE


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ATTITUDES AND PERFORMANCEOF FRANCHISEES

30%

14%

6%

Fast food, restaurantingand catering

Business services andcomputers

Printing, photography,signs and retail


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THANK YOU!

Chapter 1 - History and Overview

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