HRIM381 Management of Food and Beverage Operations

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HRIM381 Management of Food and Beverage Operations
Franchising Small-time investors chance to
strike it rich
Franchising
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HRIM381 Management of Food and Beverage Operations
Franchising

• Allows for a company to expand rapidly
• Uses other peoples money (franchisee)
• Examples
• Bojangles
• Hooters
• Brinker International

Franchising
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HRIM381 Management of Food and Beverage Operations
Franchisor

• Owner of the trademark, process, operating
  procedures, blueprints
• Maintains standards of franchisee
• Dictates provisions of contract
• Responsible use of name
• Net worth of primary stockholders
• Franchise's market area
• Provide incentives for growth
• Concurrently, Franchisor can operate their own
  units

Franchising
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HRIM381 Management of Food and Beverage Operations
Benefits for the Franchisor

• Increased market share
• Increased stream of revenue
• Up-front fees
• Maintain control of key elements of operation
• Operate wholly-own operations in key markets

Franchising
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HRIM381 Management of Food and Beverage Operations
Drawbacks for Franchisor

• Careful consideration of the franchisee selection
• Difficulty in maintaining standards
• As franchisee base increases there is a loss of
  decision making control
• Increased liability
• Mandatory disclosure of business principals

Franchising
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HRIM381 Management of Food and Beverage Operations
Franchisee

• Contracts with Franchisor
• Agrees with the provisions of contract
• Accepts conditions and blueprints of the
  franchiser organization
• Opportunity to build a large portfolio of
  franchised locations

Franchising
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HRIM381 Management of Food and Beverage Operations
Benefits for Franchisee

• Set of plans and specifications for building
  shortened start-up
• Branded Trademarks and Trade Dress
• Proven methods of operation
• National advertising
• Participation in volume purchasing discounts
• Access to capital

Franchising
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HRIM381 Management of Food and Beverage Operations
Disadvantage for the Franchisee

• Lack of operational power must conform
• Large fees
• Must meet standards as set by franchisor
• Often franchise is non-transferable
• No control over brand name ownership

Franchising
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HRIM381 Management of Food and Beverage Operations
Franchise Examples

• Franchisors
• Yum Brands
• Subway
• Quiznos Subs
• Franchisees
• Applecore Enterprises

Franchising