NAMES OF MEMBERS GROUP: 06

1. H Lam Giang 2. Phm Minh Hu 3. Phm Thanh Tm 4. L Diu Thy 5. Nguyn Th Huyn 6. Hong Th Thy Mi

GENERAL OUTLINE

I. Definition (presented by Phm Minh Hu) 1. Franchisor 2. Franchisee II. Opportunities 1. For the franchisor (presented by H Lam Giang) 2. For the franchisee (presented by Phm Thanh Tm) III. Threats 1. For the franchisor (presented by L Diu Thy) 2. For the franchisee (presented by Nguyn Th Huyn) IV. Examples (presented by Hong Th Thy Mi) 1. Successful franchisee (McDonald) 2. Potiental franchisor (Trung Nguyen coffee) V. Conclusion (presented by Phm Minh Hu)

DETAILS OF OUTLINE
I. Definition 1. Franchisor The company that allows an individual (known as the franchisee) to run a location of their business. The franchisor owns the overarching company, trademarks, and products, but gives the right to the franchisee to run the franchise location, in return for an agreed-upon fee. The franchisor allows its franchisees to use these rights and trademarks to do business. The franchisor usually charges the franchisee an upfront franchise fee for the rights to do business under the franchise name. In addition, the franchisor usually collects an ongoing franchise royalty fee from the franchisee. In short, we can understand franchisor as a firm that sells to others the right to sell or rent its products and to use its name. 2. Franchisee A franchise is a type of business operation where an entrepreneur follows a proven business model as opposed to starting completely from scratch. The operator of an individual franchise is known as a franchisee, who pays a fee to a franchisor to obtain the rights to open a unit. Furthermore, a franchisee is also usually given an exclusive area, where no other franchises belong to the same underlying business can set up shop in order to prevent internal competition. After all, a franchisee is One that is granted a franchise, as to market a company's goods or services in a certain local area. II. Opportunities of franchise 1. For the franchisor Additional Revenue

Whenever a franchisor grants a new franchise location, he enters into a franchise agreement in which the franchisee agrees to pay fees or royalties. The franchisor can use these additional sources of revenue to reduce operating expenses such as advertising and distribution costs. The revenue can also be used to increase the franchisor's cash flow. Prompting promoters. When using the franchise, the franchisor will have the advantage in advertising, promoting their brands. Business expansion and the presence everywhere of the chain stores will include images of products going into the customer's mind more easily. Ease of Expansion A franchisor can easily expand his business by granting new franchises to franchisees in untapped markets. He may be able to locate potential franchisees who are more familiar with the nuances of a particular market than he is, which increases the chances for success. The franchisor will reap the benefits of additional royalties and increased brand recognition. Increasing Royalties The franchisee must pay royalties rental brand and charges for doing business with the name and the system's franchisor. At the same time, the franchisee must purchase products and materials by which the franchisor can maximize their income. According to Franchise Key, a franchisee may be more motivated than an employee, such as a branch manager of a satellite operation. Since the franchisee has a personal financial stake in the success of the business, he may be more likely to work harder. For the franchisor, the result is more revenue through increased royalties. Leveraging human resources The franchisee will be the capital for the business and this is the driving force to promote their work better. Because the recipient is entitled to their owners more responsible. Thus, franchisors utilize human resources from the right.

In addition, franchisees can access the location where the franchisor can not reach and they can understand local information than the franchisor. 2. For the franchisee Lower Failure Rate When you buy a franchise, you are buying an established concept that has been successful. Statistics show that franchisees stand a much better chance of success than people who start independent businesses; independent businesses stand a 70 to 80 percent chance of NOT surviving the first few critical years while franchisees have an 80 percent chance of surviving. Product and system activities to be standardized You get a lot of help starting your business and running it afterwards. Many franchises are, in fact, turnkey operations. When you buy a franchise, you get all the equipment, supplies and instruction or training needed to start the business. In many cases, you also get ongoing training, and help with management and marketing. Your franchise will reap the benefit of the parent company's national marketing campaigns, for instance. Buying Power Your franchise will benefit from the collective buying power of the parent company as the franchisor can afford to buy in bulk and pass the savings along to franchisees. Inventory and supplies will cost less than if you were running an independent company. Star Power Many well-known franchises have national brand-name recognition. Buying a franchise can be like buying a business with built-in customers. Profits A franchise business can be immensely profitable. With using franchise system, the franchisee dont have to study marketing or set the network, therefore they can save lots of money. Moreover, thanks to the famous brand of parents company, the franchisee can easily earn more money than any independent company

Easier Staff Recruiting Finding good employees is a critical success factor for many independent small business owners. A franchise business with a recognized name will have greater recruiting pull than an unknown business entity.

III. Threats of franchise 1. For the franchisee Less Freedom: Franchisees are required to share financial information and conform to uniform operating procedures. The franchisee must follow compulsory standards closely about prices, qualities of products, servicesAll the things they want to change must be under controls of franchisors agreements. High costs: Buying the well-known franchise is very expensive. If this is your choice, you will have to have extremely deep pockets or the ability to arrange the necessary financing. Each and every year franchisees are required to make royalty payments in return for support in operations, and advertising. They also need to pay for training programs, posters, logos, banners, brochures Besides the original franchise fee, royalties, a percentage of your franchises business revenue, the franchisee will need to be paid to the franchisor each month. Unpredictable troubles The franchisor may not have the ability to provide market or field support. Owners can become reactive and expect the head office to solve all the problems. In your own business, the only person you count on is you.

Buying a little-known, perhaps inexpensive franchise can be a real gamble. Just because a business is offering franchises is no guarantee that the franchise you buy will be successful. Term of deadline in franchise agreement is limited, franchisee cant take part in term of contract termination if the parents companies go into troubles. 2. For the franchisor Brand influence The image of whole system will be destroyed if the franchisee operates too badly or be criticized by customers. Difficulty in management When the dense network of distributors exist weaknesses with a large number of franchise stores located everywhere, the management of managers will become difficult. Loss of trade secret The risk of stolen trade secret in the process of operation is also a challenge for a brand manager. The purchaser will be the brand franchise training mode of operation provides the special recipes typical brand. This feature makes the franchise business can hardly take place in areas where legal systems are not strong enough. Unfair competition The CEO of the franchisor is faced with a difficult partner that is no small brand owners (buyers) tend to become competitors of the franchise in an effort to win customers and market share.

IV. Examples 1. Successful franchisee

McDonalds was founded in 1955, in 30 years the company has quickly dominated the local market with more than 10,000 restaurants spread across the states of the United States. The franchisee worked well based on the parent companiesexperience and well-known brands. The revenue is growing and growing. By 2000, McDonalds earned $21 billion from 28,707 restaurants located in the external market, this figure accounted for 53% of total revenue of $40 billion company. The level of market penetration of only McDonalds stop at restaurant for 500,000 people. In addition, Mc Donalds only served less than 1% of global population. The success of McDonalds depended on the way they did in the market. They took advantage of all opportunites to develop their business based on franchise system. In future, they will expand their brand in 3 big markets: Europe, East Asia and Latin America. 2. Potiential franchisor In the early years by the pioneer unit in the area of franchise in Trung Nguyen of Vietnam should have been quite confused in his direction and relatively easy to sell a franchise to the current situation there are too many cafes along bearing Trung Nguyen brand but not the same class. Trung Nguyen otherwise fall into the loss of quality control and uniformity of his began selling franchise because large numbers without adequate preparation.Indeed there is quite consistent with customary appearance that fell too saggy, or a modest airconditioned restaurant serves very good workmanship and poor workmanship popular restaurant, decoration does not follow a uniform standard general. From late 2002 Trung Nguyen was invited to the Australian expert to remedy this situation, but in reality to adjust the system with more than 400 cafes spread throughout the country is a challenge of operating each cafe and the owner of the brand in general. Trung Nguyen has some troubles in becoming a successful franchisor, but its totally possible to help their business become the leader in coffee market. They should take advantage the companys strength and learn how to manage franchise system to avoid failure. Thats why Trung Nguyen is regarded as potiental franchisor.

V. Conclusion This essay is all about the franchise market. Whether you are franchisor or franchisee, it is best to do as much research as possible. Both of opportunities and threats are divided equally for two parties. So with this essay, I hope you can decide which exactly you want and choose the best way to go.

Resources and References: http://franchises.about.com http://www.franchise.com http://www.franchisedirect.com

ASSESSMENT

Full name H Lam Giang Phm Thanh Tm Hong Th Thy Mi Nguyn Th Huyn Phm Minh Hu L Diu Thy

Self Assessment

Group Assessment

Teacher Assessment