FRANCHISING

HISTORY AND OVERVIEW

Leslie Andaya
FRANCHISING
A business opportunity
which the owner of a service or a
trademarked product grants exclusive
rights to an individual
for the local distribution and or sale of
service or product
and in return receives a payment or royalty
and conformance to quality standards.
FRANCHISE AGREEMENT
FRANCHISOR FRANCHISEE
Owns product, trade mark or
trade name
Provides support

Uses product, trademark or
trade name
Expands business with
franchisors support
Receives fees Pay fees
3 MAJOR COMPONENTS OF
FRANCHISE ARRANGEMENT
PRODUCT
OR SERVICE
ROYALTY
FEE
TRADEMARK
AND LOGO
TYPES OF FRANCHISING
PRODUCT AND
TRADE NAME
BUSINESS
FORMAT
PRODUCT-TRADE NAME
FRANCHISING
Acquires trade name, trademark, and/or
product of franchisor
Supplier-dealer relationship

Examples:
COCA-COLA
EXXON
FORD MOTOR COMPANY
Use franchisors product, service, and
trademark and also the complete business
method to conduct the business itself.
Examples:



BUSINESS FORMAT
FRANCHISING
Fast food
Service
Restaurants
Building and Construction
Business Services

Retail
Automotive
Maintenance
Retail-food
Lodging

HISTORY
OF
FRANCHISING
Franchising in the 1800's
"FRANCHISE" is a French derivative
meaning privilege or right.

Isaac Merritt Singer, founder of I. M.
Singer & Companycharge licensing (or
franchise) fees to business people who
would own the rights to certain
geographical areas. He had created a
network of dealers.





Coca-Colaintroduced franchising into its
manufacturing and bottling areas to
reduce financial risk and gain market
share.

Automobile manufacturerscreated a
network of licensed dealerships to sell and
service their vehicles.
Franchising in the 1800's
Oil companieslatched onto the
business concept to create gas and
service stations to keep those cars
moving.
Franchising in the 1800's
Franchising from 1950-1990
Convenience goods and services

McDonald's, Kentucky Fried Chicken,
laundry services, dry cleaners, hotels, and
rental car franchises

Federal Trade Commission (FTC) passed
Rule 436.1, Franchise Disclosure Act
creation of disclosure document which
provides information about the franchisor
and franchise system to the prospective
franchisee.
(UFOC) Uniform Offering Circular
(FDD) Franchise Disclosure Document

Franchising from 1950-1990
Franchising in 1990s and the
Millennium
Multi-unit franchising has emerged to play
a significant role. No longer content to
operate a single standalone franchise unit,
many savvy and aggressive franchisees
have opened up several units, and some,
even several different brands.
The franchising boom results of 2 major
trends:

The desire to start a business of my own
The change in lifestyle put growing
emphasis on service and convenience

Franchising in 1990s and the
Millennium
Conversion Franchisingowner of an
existing business becomes a franchisee to
acquire some benefit from association with
the franchisor.

Examples:
Century 21
RE/MAX
Franchising in 1990s and the
Millennium
WHATS HOT RIGHT NOW?
http://www.entrepreneur.com/fran
chises/toptenlists/index/html/
TOP 10 FRANCHISES OF 2014

Anytime Fitness
Hampton Hotels
Subway
Supercuts
Jimmy John's Gourmet Sandwiches
7-Eleven
Servpro
Denny's
Pizza Hut
Dunkin' Donuts

TOP HOME-BASED FRANCHISE
OPPORTUNITIES IN 2013

Jan-Pro Franchising Int'l. Inc.
System4
Vanguard Cleaning Systems
Snap-on Tools
Jazzercise Inc.
Cruise Planners-American Express Travel
Anago Cleaning Systems
Matco Tools
Chem-Dry Carpet & Upholstery Cleaning
CruiseOne

TOP TEN FRANCHISES WITH START-UP
COSTS LESS THAN $50,000 IN 2013

H&R Block
Jan-Pro Franchising Int'l. Inc.
System4
Vanguard Cleaning Systems
Jazzercise Inc.
Cruise Planners-American Express Travel
Anago Cleaning Systems
Chem-Dry Carpet & Upholstery Cleaning
CruiseOne
Novus Glass


TOP NEW FRANCHISES FROM
FRANCHISE 500 IN 2013

Kona Ice
Menchie's
Orange Leaf Frozen Yogurt
ShelfGenie Franchise Systems LLC
Bricks 4 Kidz
Smashburger Franchising LLC
GameTruck Licensing LLC
Paul Davis Emergency Services
Signal 88 Security
Mac Tools

FASTEST GROWING FRANCHISES
FROM THE FRANCHISE 500 IN 2014

Subway
7-Eleven Inc.
Mac Tools
Jan-Pro Franchising Int'l. Inc.
Dunkin' Donuts
Cruise Planners-American Express Travel
Vanguard Cleaning Systems
Jimmy John's Gourmet Sandwiches
Great Clips
Pizza Hut Inc.

TOP TEN U.S. FRANCHISORS SEEKING
FRANCHISEES OUTSIDE THE UNITED
STATES IN 2013

7-Eleven Inc.
Subway
Hampton Hotels
Kumon Math & Reading Centers
McDonald's
KFC Corp.
Jiffy Lube Int'l. Inc.
Pizza Hut Inc.
Baskin-Robbins
Anytime Fitness

RETAIL FRANCHISING
SOME POPULAR BUSINESS
FORMAT FRANCHISES
REATAURANTS RETAIL LODGING
HEALTH &
BEAUTY
BUSINESS
SERVICES

KFC
McDonalds
Pizza Hut
Taco Bell


Blockbuster
Video
Radio Shack
The Athlete's
Foot
GNC
Franchising


Choice Hotels
Bass
Hotels/Holid
ay Inn
Marriott
Hotels


Merle Norman
Cosmetic
Studios
Supercuts
Jenny Craig
International
Cost Cutter
Family Hair
Care

Mail Boxes
Etc
H & R Block
ACE America
Cash
Express
Kwik Copy
MAINTENANCE
/CLEANING
AUTOMOTIVE
SERVICE
EDUCATION
/TRAINING
REAL ESTATE CONVENIENCE

Jani-King
International
The
ServiceMast
er Company
Merry Maids


Meineke
Discount
Muffiers
AAMCO
Transmissio
ns
Medias
International
Precision Auto
Care


Dale Carnegie
Training
Barbizon
School of
Modelling
Berlitz
International
Sylvan
Learning
Systems

Century 21
RE/MAX
Internation
al
Coldwell
Banker
Residential
Affiliates

7-Eleven
Family Mart
28%
34%
38%
43%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1975 1990 2000 2010
Growth of Franchise sales as a % in total retail
sales
Franchise sales as a % in total retail sales
INTERNATIONAL
FRANCHISING
The success and failure of franchising in
international markets depends on the ff:
franchisors success in domestic competitive
position and market penetration
ability to expand based on its knowledge and
expertise
ability to adapt to countries that have cultural
and language differences, transcend economic
and political distinctions as well.

MICROVIEW OF
FRANCHISOR-FRANCHISEE
FRANCHISOR
DEMOGRAPHIC TRAITS OF CEO
AGE MEN WOMEN
EQUITY
POSITION
FOUNDER
OF THE
FIRM
YEARS IN
FRANCHISE
COMPANY
YEARS
HELD THE
POSITION
48.8 y/o 94.2% 5.8% 86% 47.7% 10.4 yrs. 8.1 yrs
FRANCHISEE
ATTITUDES AND PERFORMANCE
OF FRANCHISEES
30%
14%
6%
Fast food, restauranting
and catering
Business services and
computers
Printing, photography,
signs and retail
THANK YOU!