How About a Franchise?

1
How About a Franchise?
2
Types of Franchises
3
The Top 10 Franchise Organizations
1. Yogun Früz Worldwide 2. McDonalds 3. Subway
4. Wendys International Inc. 5. Jackson
Hewitt Tax Service 6. KFC 7. Mail Boxes
Inc. 8. TCBY Treats 9. Taco Bell
Corp. 10. Jani-King
4
Articles in a Typical Franchise Agreement

• The full initial costs and what they cover
• Use of the franchisors trademarks by the
  franchisee
• Licensing fees
• Land purchase or lease requirements
• Building construction or renovation requirements
• Equipment needs
• Initial training provided
• Starting inventory requirements
• Promotional fees or allowances
• Use of operations manual
• Royalties payable

Continued
5
Articles in a Typical Franchise
Agreement (Continued)

• Other payments that must be made to the
  franchisor
• Ongoing training requirements
• Cooperative advertising fees
• Insurance requirements
• Interest charges on financing
• Requirements regarding purchasing supplies from
  the franchisor and prices
• Restrictions that apply to competition with other
  franchisees
• Terms covering termination, renewal rights, sale
  of the franchise and similar topics

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A Sampling of Canadian Franchisors
Source Adapted from The 1999 Franchise Annual,
Info Franchise News Inc., 1999.
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Future Trends in Franchising

• Conversion franchising
• Increase in the number of women involved in
  franchising
• Growth in non-food retail stores
• Impact of computer technology
• Growth of franchised medical services
• Continuing importance of restaurants
• Growth of auto repair franchises
• Growth in such areas as automobile leasing,
  packaging and rapid delivery of parcels, home
  building, medical centres, temporary help
  services, business brokers and financial planners
• Increased number of convenience stores
• Growth of franchised educational services

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What the Franchisee Receives

• Brand name recognition
• Support from the corporation during start-up
• Training of management and employees
• Access to financial support
• A proven business plan and strategy
• Purchasing power
• Corporate monitoring and assistance
• Less risk of failure
• National/regional promotion
• Access to additional units

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What the Franchisor Gets

• A high degree of control over their franchisees
• An initial franchise fee as well as periodic
  royalty payments and advertising contributions
• A mark-up on the supplies and equipment
  franchisees are required to buy from them,
  thereby increasing their operating costs
• Volume rebates or other benefits from suppliers
  which are not typically passed on to the
  franchisees
• A way to expand their business quickly with
  limited capital from the original owners

Continued