Franchise Management For Dummies. Mazero Joyce
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Название: Franchise Management For Dummies
Автор: Mazero Joyce
Издательство: John Wiley & Sons Limited
Жанр: Зарубежная образовательная литература
isbn: 9781119337232
isbn:
In most franchise systems, as the franchisee signs a new single-unit franchise agreement and pays the initial fee, a pro-rata portion of the development fee paid will be applied to the initial franchise fee due. In other situations, you will receive no credit and you may pay the full initial franchise fee for each location.
You can expect that the development agreement may modify some portions of your franchise agreements. In addition to changing the initial franchise fees you may be charged, the franchisor may offer a reduced royalty after a certain number of locations have been developed, and changes in training, site selection, and development are common. You can also expect your franchisor to require you to have a general manager overseeing your units, and they may require you to have someone on staff to conduct the training of your staff.
A multi-unit development relationship can have significant advantages for both the franchisor and the multi-unit franchisee.
For the franchisor:
❯❯ Each multi-unit franchisee will be opening more than one location. That means the cost of acquiring a franchise on a per-unit basis will be lower than had the franchisor needed to find separate franchisees for each location.
❯❯ Fewer franchisees owning multiple locations means that the cost of supporting each location may be lower because the franchisor will be working with the franchisee’s general manager for all the locations and may not work with separate unit managers for each location.
❯❯ Having controlled growth leads to better planning for advertising and better leveraging when negotiating with suppliers and other vendors.
❯❯ With fewer franchisees in a market, it is easier to coordinate local advertising and promotions.
For the multi-unit developer:
❯❯ You gain the ability to shift personnel from one location to another depending on where the staff is needed.
❯❯ You may be able to establish a commissary or kitchen and combine the preparation of products for all the locations or save on freight and other costs by buying in greater quantities at a lower cost and storing inventory in a centralized warehouse, allowing for smaller retail locations and lower real estate costs.
❯❯ General managers overseeing multiple locations may reduce management costs at each location. Franchisees may only need an assistant manager, and with consolidated back-of-house support staff, including a trainer, internal costs on a unit basis can be reduced.
Figure 2-2 depicts the multi-unit franchisee-franchisor relationship.
© John Wiley & Sons, Inc.
FIGURE 2-2: The multi-unit franchisee family tree.
Why are two agreements needed? Because the multi-unit development agreement and the franchise agreement serve different purposes. The multi-unit development agreement lays out the rights and obligations being granted to open the locations, and the franchise agreement governs how each location, as part of the franchise system, will operate.
When you become a master franchisee, you become a franchisor in an area and are authorized to offer subfranchises through your master franchise license. As with any franchisor, your master franchisor will prepare and provide to prospective franchisees its own FDD and agreements that will contain information about you and your services.
In most master franchise relationships, the first thing you will likely be required to do is open and operate a few locations of your own. Once that has been accomplished, you will then be allowed to offer franchise rights to other franchisees (called subfranchises) to open and operate franchises in your market.
You will sign a master franchise agreement with the franchisor and usually pay a master franchise fee. Because your subfranchisees pay you their initial franchise fees and continuing royalty, typically you share a portion with your franchisor. The percentage split will vary widely depending on the franchise system. There is no standard master franchise relationship:
❯❯ The subfranchisee may execute a franchise agreement directly with the franchisor or with the master franchisee.
❯❯ The franchisor may or may not have the right to approve the new subfranchisee.
❯❯ The subfranchisee may receive training and continuing support from the franchisor, the master franchisee, or both.
❯❯ The subfranchisee may pay fees directly to the master franchisee, to the franchisor, or a combination of both.
Of all the types of franchising relationships, the master franchise or subfranchise relationship is the most complex.
Figure 2-3 shows the master franchise relationship.
© John Wiley & Sons
FIGURE 2-3: The master franchisee family tree.
With the exception of foreign franchisors entering into the United States, don’t expect a lot of U.S. – based franchisors to offer a master franchise relationship today. Although it is still used to some extent by U.S. franchisors internationally – and the trend is shifting away from master franchising to multi-unit development relationships, as technology and other advancements have made it possible to better directly support franchisees internationally – its popularity is waning.
If you are a franchisor looking at developing internationally, and that includes foreign franchisors entering the United States, we recommend that you first consider going direct and offering a multi-unit development agreement and not use a master franchise relationship. By franchising directly to multi-unit franchisees, you avoid the need to share the fees and other revenue in a market and retain most of the benefits of master franchising. Technology has reduced the need for master franchising to a very great extent, and with a well-structured multi-unit development growth strategy, much of the expected benefits of master franchising are no longer as significant.
There are occasions where master franchising still makes sense, and in those circumstances both of your authors still use it with our clients. But rarely today is it our first choice, and we generally explore other approaches first.
Both an area representative and a master franchisee acquire a territory in which to solicit and support franchisees, and both share in the initial and continuing fees collected from franchisees with the franchisor. The difference is that the area representative СКАЧАТЬ