Franchising and How It Can Term Paper

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The franchisee is essentially self- employed, but must operate the franchise outlet according to the procedures by the franchisor'. Other advantages include better raising finance opportunities due to lower risks associated with already prevalent brand expansion, employee training by a franchisor, overall reduction of business risk to the franchisee, external benefiting from the expansion of the franchisor brand and chain, less expenses on advertisement and Public Relations campaign and access of the franchisor to most public advertisement resources, business insurance and further on. The study of Barrow, Golzen and Kogan accents that 'In the U.S.A., for example, McDonald's, one of the world's largest franchisors, spends more on TV advertising than Kellogg's, and virtually the same as the Ford Motor Company'. (Barrow, Golzen & Kogan 2000 p.37). As the franchisee operates in local to him market, he is able to exploit this insight knowledge and outperform the market prevalent competitors. According to Mendelsohn, 'Sales in 1997 reached £7 billion, compared with £5.2 billion in 1990, which represents somewhat less than the 50% increases in systems and franchisee numbers over the same period'. (Mendelsohn, M 2001 p.321).

The operations manual provided typically by a franchisor to the franchisee benefits them both. 'The operations manual is a complete description of all the operating policies, procedures, methods and systems used to run the business'. (Clarke, G 1999 p.30). The operations manual enables the franchisor to make sure, that although each business is independently owned and operated, the same levels of quality and customer service are consistent throughout the network. A small business that is thinking about becoming a franchisor can illustrate how they want the business to be run on a day-to-day basis through the operations manual. An operational manual may include some of the following sections; opening hours and days, pricing policies, accounting, advertising, staff duties, payment of franchise fees, stock control procedures, staff schedules and rotas and cash control and banking procedures.

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The operational manual is very useful to the franchisee in that it helps them with the day-to-day running of the business. Also if there are any changes made to the running of the franchise the operations manual will be updated accordingly. A franchisor like Kentucky Fried Chicken (GB) Ltd. may include the following sections in their operations manual; 'cleaning routines, recipes, methods of preparations of food, kitchen procedures and customer complaints procedures'. (Mendelsohn, M 2001 p.69).

Mendelsohn further distinguishes ability to become a member of the British Franchising Association (BFA) as a great business benefit to the franchisors and the franchisees where they can acquire quality and updated business information, advice and tips. The BFA is the self-regulating body for franchising throughout the UK. 'The BFA has two categories of membership, full membership and associate membership. Full members meet all the BFA criteria, while associate members are on the whole more recent entrants to franchising who have yet to establish a proven trading and franchising record'. (Mendelsohn, M 2001 p.312). According to organization code, being a member of the BFA has the following benefits for franchisors; reduced costs on exhibitions and advertising, a newsletter from the BFA on a quarterly basis, franchising related training and seminar programmes, credited as one of the best franchisors, contacts from overseas and national and regional meetings giving advice and experience to franchisors. Franchisees are not members of the BFA, but prospective franchisees can benefit from the BFA. The BFA identifies the names of the franchisors that are operating in accordance with.....

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