A franchise is a business model that aims at growing a business through a licensed relationship. A franchisor is a party that grants the license and provides the terms and conditions for the products and services that franchisees are to offer. The goals of this essay are to explain the two franchises that I would like to own, and they include; Children's products and services and Food services.
The children's products and services franchise are appealing because there is a certain market. The estimated capital start-up requirements cost from $635,000 to $4,511,000 and for the fast food services, the capital ranges from $250,000 to $3 million (Burns & Dewhurst, 2016). During the process, the fees every franchiser ends up being charged range from $20,000 to $ 30,000. Franchisor’s financial requirements before considering a candidate involve liquidity and net worth. It takes more than a year for this business to turn a profit. Therefore, franchisors usually need candidates with a minimum amount of liquidity to keep the business. For the net worth, the franchisors usually have a minimum level they expect from a candidate (Park & Jang, 2017).
Delegate your assignment to our experts and they will do the rest.
Apart from the investment fees, other fees include continuing fee which is about 5% of gross sales, marketing fee, cooperative advertising, local marketing expenses, advertising fee, transfer fee, audit expenses, renewal fee, maintenance fee, technology fee, remodeling expenses, insurance, inventory, interest expenses, lease payment, and costs and attorney’s fees (Hatten, 2015).
There are 40,000 existing children’s franchising services and 190, 649 fast food franchises. The failure rate for both of them is about 20%, and the termination rate is about the same percentage. There are rare cases on bankruptcy that led to litigation. Only 16 % of companies have filed for bankruptcy. When a franchise is renewed, cancelled or terminated, the following must be bought from the information of the franchisor; trademark and Assumed Business Name Registration, advertising materials related to the sale of franchises and registration of franchise (Fan, Kuhn, & Lafountaine, 2017).
References
Burns, P., & Dewhurst, J. (Eds.). (2016). Small business and entrepreneurship . Macmillan International Higher Education.
Fan, Y., Kühn, K. U., & Lafontaine, F. (2017). Financial constraints and moral hazard: The case of franchising. Journal of Political Economy , 125(6), 2082-2125.
Hatten, T. S. (2015). Small business management: Entrepreneurship and beyond . Nelson Education.
Park, K., & Jang, S. S. (2017). Is restaurant franchising capital a substitute for or a complement to debt?. International Journal of Hospitality Management , 63, 63-71.
