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Entrepreneurship Options

C. FranchisingA start-Up entrepreneur may decide to go into business bysimply buying a locally operate lets say Jollibee or PizzaHut. This practice is known as franchising.

In the US alone, the sales in the franchising industry in1991 were $758 billion as compared to the $334billionpesos in 1980.Here in the Phils. Sales of franchises went up 100B in 2001 comparedto 82B in 2000.

This proves the popularity and acceptability of franchising businessamong Filipinos.

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Franchise came from the Old french franchir, which meansfreedom, privilege or immunity from burden.

During the feudal ages in Europe, the local landlords

would grant rights to the subordinates to hold and

attend markets or fairs. The landlords then were thefirst franshisor and the subordinates were the first

franchisee.

One of the first franchise agreements was during the

nineteenth century when SINGER SEWING MACHINECOMPANY gtranted distribution franchises to their

dealers. Singer was the first one to issue franchise

contracts

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Entrepreneurship OptionsC. FRANCHISING

After the world war II there was the expansion of motels,drugstores, variety shops, and employment agemcieswhich exhibited franchising principle.

In the 1950s products and services started to franchise inthe US.

In 1955, Ray Croc franchise a fast-food chain, calledMcDonalds .

The franchising boom came in 1960s and 1970s wherefastfood restaurants started to franchise.

In the Phils. Mcdonalds and Jollibee were in the market in1970s.

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Entrepreneurship OptionsC. FRANCHISING CONCEPTS

Franchise- it is an agreement whereby an independentperson is given exclusive right to sell a specializedgood or service

Franchising is a marketing system based on anagreement wherein one party(franchisee orfranchisor) is given the right to handle businessas anindependent owner but is required to abide by theterms and conditions specified by the other party

(franchisor).For franchisors, franchising means selling the franchise, while for

the franchisee or franchiser, franchising understood to meanbuying a franchise.

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C. FRANCHISING CONCEPTSFranchisor refers to any entity that owns the franchise name

and distinctive elements (such as patent, trademark, signs and

symbols) which grant the right to sell its products.

Franchisee or the franchise buyer it is the entit y that buysto operate the business using the name, product, trademark,

service mark, product and business format of the franchisor

under the terms and condtions of the franchise contract.

Franchising contract it refers to the legal documentinvolving two parties (franchisor and franchisee) specifying the

obligations, primarily of the franchisee and the conditions

under which the latter will coduct business.

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Entrepreneurship OptionsBENE

FITS OF FRANCH

ISING

Both the franchising and the franchisee can benefit from

franchising. For the franchising, this guarantees faster

expansion and greater market penetration for his

business. In effect, this can lower operating costs.For the franchisee, getting a franchise gives him better

brand recognition and less-costly share in local and

natinal promotion of the product. Furthermore, the

franchisee can avail of management training at lesscost. In some cases, the franchise can also enjoy

financial assistance from the franchiser.

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Entrepreneurship OptionsTYPES OF FRANCHISING

The Product and Trademark franchising involves anarrangement wherein the franchisee is given the rightto manufacture and/or distribute a widely recognizedbrand or product.

The franchisor has very little control over how thebusiness is operated but it demands that thefranchisee maintain the integrity of the products.

Examples of these are franchises in the softdrinkindustry, gasoline service stations and automobile andtruck dealerships.

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Entrepreneurship OptionsTYPES OF FRANCHISING

Three Types are:

1. Manufacturer-Retailer franchise in whichfranchisee buys from the manufacturer and directlysells it to the consumer.

2. Manufacturer-Wholesales franchise- themanufacturer sells to the franchisee partiallycompleted products.

3. Wholesaler-Retailer franchise- wholesaler is thefranchisor that grants the retailer the right to retailtheproduct but use the wholesalers name,trademark, logo or other identidfying marks.

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ADVAN

TAGE

S OF FRANCH

ISING

1. Possibility of failure is lessened.

2. Increase in new market location through urbanization of local areas,

3. Customers tend to patronize a specific franchised service or product.

4. Customer loyalty and preference for a successful brand name.

5. Better management through training provided by the franchisor.

6. Technical and other assistance is easily accessed from the franchisor.

7. It is easier and faster to build good reputation and gain recognition.

8. A better assurance that the business will be profitable.

9. Obtain greater purchasing power.

10. High performance standards.

11. Advertising cost is less.

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DISADVAN

TAGE

S OF FRANCH

ISING

1. High cost of franchise

2. Operation is controlled by the franchisor

3. Presence of fierce competition

4. Pressure continuously make the product acceptable to

the market.

5. Problem associated with expiration of the franchise.

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C. A FRANCHISE PROVIDES:1. Business Name

2. Market Research

3. System ideals and Operating

manual4. Propriety marks

5. Experience

6. Good judgement of the

franchisor7. Training

8. Location assistance and

approval

9. Store lay out and construction

supervision

10. Exclusive area coverage

11. Procurement programs

12. Hiring assistance

13. Grand opening assistance

15. Marketing Strategies

16. Research andDevelopment

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D. WHY ANENTREPRENEUR MAY BUY A FRANCHISE1. Earning depends on the effort

2. Opportunities for unlimited

income

3. Personal Satisfaction4. Tax benefits

5. Freedom to pursue the job

that you want

6. Assurance of continuousemployment

7. Eliminates the difficulties in

starting up

8. Ease inoperatinalizing the

business plan

9. Benefits of having an

established system

10. Benefits from quality

research and development

11. Quicker start-up

12. Probability of success is High

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C. CONSIDERATIONS INCHOOSING A FRANCHISE1. Cost of Investment

1. Franchise Fee

2. Set-up operation

3. Operational expenses andpurchases

4. Royalties

5. Advertisements

2. Franchisees preference and

interest

3. Location of the franchise

4. Reputation of the franchise

orgranization

5. Franchise support and

assistance

6. Possibility of obtaining a

master franchise.

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Entrepreneurship OptionsINTERNATIONAL ENTREPRENEURSHIP

As entrepreneurs are affected by glozalisation. And a

number of forces have led to increased globalization.

Thus, all entrepreneurs no matter how much they

dont want to grow internationally, they have to tradein an economy that is affected by the trends of the

global economy.

Trading accross boarders requires some understanding

of:1. different cultures

2. different economies

3. different way of doing business

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Entrepreneurship OptionsThe Process of Internationalization

Step 1 The entrepreneur establishes a

domestic market

Step 2 The entrepreneur sells in an overseas

market through an agent

Step 3The entrepreneur establishes a

subsidiary operation in the overseas

market, dealing direct customers

Step 4 Production in the overseas market

through a subsidiary operation

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Entrepreneurship OptionsINTERNATIONAL ENTREPRENEURSHIP

As entrepreneurs are affected by glozalisation. And a

number of forces have led to increased globalization.

Thus, all entrepreneurs no matter how much they

dont want to grow internationally, they have to tradein an economy that is affected by the trends of the

global economy.

Trading accross boarders requires some understanding

of:1. different cultures

2. different economies

3. different way of doing business

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Business starts and proceeds with theprocess of thinking carefully, asking

every fundamental questions and giving

the clearest answers to them.

GENERATE IDEAS

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TO SEE AN

OPPORTUNITY

IS NO GREAT ART.THE ART LIES BEING

THE FIRST TO SEE IT

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How do we generate ideas?

External Scanning

Needs and Resource Analysis thru:

SWOT Analysis

Research, Interviews & surveys

Demand and Supply Analysis

Internal Scanning

Existing data or information Past business ideas and ventures

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CONSIDERATIONS IN IDENTIFYINGBUSINESS

OPPORTUNITIES

1. Capitalize on available resources

Raw Materials Local Specialized Skills

Technology

Industrial Information

Utilities Infrastructure

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2. Availability of market

3. Government Support

4. Financial Viability

5. Socio-economic impact in the community.

CONSIDERATIONS IN IDENTIFYINGBUSINESS

OPPORTUNITIES

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Determining product line and business

type

Questions:

Do you want to manufacture a product,

deliver a service, or go into trading? Would you like to be a subcontractor?

What specific fields are you interested in?

Can you apply your skills, hobbies or workexperience to this field?

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Types of Businesses

Trading/Vending Wholesaler

Retailer

Distributor

Franchising Food

Service

Health & Wellness

Manufacturing/ProcessingExporter

Domestic Producer

Sub-contractor

Service IndustriesHealth & Wellness

Transportation and

Communication

ICT

Agriculture /Aquaculture

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Idea Screening

Make an assessment on the choices of

business ideas based on:

Knowledge of the business

Experience in the field

Skills

Ease of Entry

Uniqueness

Documents

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