JOHN LAWRENCE VILLACORTA
BSENTREP 3A
WRITTEN REPORT WITH REGARDS TO THE DISCUSSED TOPICS
Franchising is a global entrepreneurial phenomenon, extending beyond fast food into over 120
diverse lines of businesses.
The history of franchising dates back to ancient China, with European crowns using it for land
control and exploration.
Benjamin Franklin, a key figure in early American history, introduced franchising in 1731 through
a printing business partnership in South Carolina.
The first franchise, a "Copartnership for the carrying on of the Business of Printing," laid the
foundation for modern franchising.
Franchising involves a relationship between a brand owner (franchisor) and a local operator
(franchisee).
Franchisors license their trade name and business methods to franchisees under a formal
agreement.
Franchisees pay an initial fee (franchise fee) and ongoing fees (royalties) for using the brand and
business system.
Franchising is a system for business expansion, distribution of goods and services, and operating
under a recognized brand name.
It allows entrepreneurs to benefit from an established brand while providing support from the
franchisor.
Franchising is a system for business expansion and distribution of goods and services under a
recognized brand name.
It involves a relationship between the brand owner (franchisor) and the local operator
(franchisee).
Examples like Wendy's and Midas show that franchises offer business systems, not just
products.
A franchise occurs when a business licenses its trade name and operating methods to a person
or group (franchisee) under a contract (franchise agreement).
Franchisees pay initial and continuing fees (franchise fee and royalty) to the franchisor for using
the trade name and operating methods.
Franchised businesses provide consumers with consistent products, services, and experiences.
Franchising creates opportunities for business ownership, personal wealth, and contributes to
the growth of peace and democracies.
In the U.S., business-format franchising is projected to generate over 9.5 million jobs and
contribute over $8.6 billion to the economy.
Franchising is a significant force in the U.S. economy, with over 900,000 business-format
franchised businesses projected to exist, even during economic downturns
Brand is a franchise system's most valuable asset, influencing consumer decisions and
expectations.
Consumers often associate the brand with the company's reputation and the experience they
expect to receive.
Franchisors invest time, energy, and money in developing brands to create a consistent message
and customer experience.
A strong brand communicates a message to customers and fosters immediate familiarity in their
minds.
Brand recognition is a significant advantage for franchisees, eliminating the need to build
awareness in the market.
Ongoing advertising and marketing programs contribute to maintaining and growing the
strength of the brand.
Franchisees benefit from successful brand development through possible increased sales.
Start-up franchisors may begin with local brand recognition and work towards achieving regional
or national status.
Product-distribution franchises and business-format franchises are the two main types of
franchises.
In product-distribution franchising, the emphasis is on the products manufactured by the
franchisor.
Franchisees in markets with limited brand recognition may need to invest more in advertising
and promotions.
Two types of franchises: product-distribution franchises and business-format franchises.
In product-distribution franchising, the emphasis is on the products manufactured by the
franchisor.
Product-distribution franchisees may need to prepare products before sale or provide post-sale
servicing.
Unlike business-format franchising, product-distribution franchises may license trademarks but
typically don't provide a complete business system.
Product-distribution franchises represent a significant portion of total retail sales from all
franchises.
Over 80 percent of franchises in the United States are business-format franchises.
Business-format franchises focus on providing a complete business system, which is the
hallmark of this type of franchising.
This book primarily focuses on business-format franchises, given their prevalence among
franchisees.
A glimpse into product-distribution franchises is provided in the following section.
In a product-distribution franchise, franchisees sell products manufactured by their franchisor.
Industries often associated with product-distribution franchising include soft drinks,
automobiles, mobile homes, automobile accessories, and gasoline.
Examples of product-distribution franchises include Coca-Cola, Goodyear Tire, Ford Motor
Company, and John Deere distributors.
The relationship in a product-distribution franchise is similar to supplier-dealer relationships, but
with a closer association to the company's brand and more services provided by the franchisor.
Business-format franchises provide the franchisee with the complete system for delivering a
product or service, creating consistency.
