978-0134741086 Chapter 8 Part 2

Chapter 8, Page 129

 Inventory the business climate for U.S. business operating within the foreign

country

 Assess the state of the current and anticipated economic and financial environment

 Gain information about government restriction on a national, regional and local

bases

 Assess tax implications

 Examine logistical issues, such as shipping and delivery options

 Explore hiring processes and anticipated costs

 Perform a complete financial analysis

 Conduct a risk analysis

4. Describe the opportunities and the challenges franchisors face when entering

5. Use the Internet as a resource to develop a list of at least five suggestions to help

new franchisors looking to establish outlets in China or India to be successful. (LO

Chapter 8, Page 130

protections.

 Identify potential “benchmark” businesses established in African markets that may

offer insight regarding their entry strategy and success to date.

 Conduct a comprehensive market analysis of each local market.

 Conduct market research based on your product offering.

 Research all attributes of the proposed site(s).

 Conduct a logistic supply chain analysis for accessing and transporting goods and

physical resources.

 Assess the availability, requirements and costs of the required labor resources.

 Establish the role that exchange rates may play in the financial arena of the

venture.

 Prepare a comprehensive business plan addressing all issues these new markets will

present and with realistic timeframes.

 Identify adaptation and contingency options if things do not go according to the

plan.

Part 4: Chapter Discussion Questions

8-1. What is franchising? (AACSB: Reflective Thinking)

8-2. Describe the three types of franchising and give an example of each. (LO 1)

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Examples include Exxon, Chevrolet, and Pepsi Cola.

3. Pure franchising: This is a system of franchising in which a franchisor sells a

franchisee a complete business format and system. Examples include Burger King,

H&R Block and Hampton Hotels.

8-3. Discuss the advantages and the disadvantages of franchising for the franchisee.

(LO 2A and LO 2B) (AACSB: Reflective thinking)

8-4. Why might an independent entrepreneur be dissatisfied with a franchising

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8-5. Fran Lubbs, who after a five-year stint left the corporate office of Goddard

School, an early education franchise, to become a franchisee, says, “Follow the

system. It’s one of the reasons you bought the franchise. Don’t try to change it,

break it, or fix it.” Do you agree with her? Explain. (LO 2A) (AACSB: Analytical

8-6. What steps should a potential franchisee take before investing in a franchise?

(LO 4) (AACSB: Reflective thinking)

8-7. What is the function of the FDD? Outline the protection the FDD gives

prospective franchisees. (LO 3) (AACSB: Reflective thinking)

8-8. Describe the current trends in franchising. (LO 5) (AACSB: Reflective

thinking)

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run their franchises more efficiently than the franchisor can.

 Multiple-unit franchising: A franchisee opens more than one unit in a broad

territory within a specific time period. “Franchisers are finding it’s far more

efficient in the long run to have one well-trained franchisee operate a number of

units than to train many franchisees.”

 Area Development and Master franchising: A franchisee is given the right to create

a semi-independent organization in a particular territory to recruit, sell, and

support other franchisees. Under area development the franchisee earns the

exclusive right to open multiple units in a specific territory within a specified time.

A master franchise is a method that gives a franchisee the right to create a semi-

independent organization in a particular territory to recruit, sell, and support other

franchises.

 Cobranding (or piggyback or combination) is a method of franchising in which

two or more franchises team up to sell complementary product or service under

one roof. Cobranded outlets save their owners money because they lower both

real estate and operating costs. The same employees sell both brands. The

franchisors share advertising, maintenance, and other costs.

8-9. Robyn Vescovi, a former financial executive who recently became a Tasti D–

Lite franchisee, offers the following advice to first-time franchisees:

 Do your homework. Research the brand (long- and short-term business model)

 Know the team behind this brand and understand their vision for that

product/business. Know them as franchise experts and their proven successes.

 Know yourself and your limits. This will help you determine the right business

(e.g., new and innovative franchise or well-established franchise).

 Be involved! Don’t expect that things “will just happen.” You have your own

business, but you are part of something bigger, and it is in your best interest to

participate in whatever you can in support of that brand/product. Don’t be an

“absentee franchisee.”

Do you agree? Explain. What other advice can you offer first-time franchisees?

(LO 4) (AACSB: Application of knowledge)

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 Know the people behind the brand: Are these people you can work with and

become a part of the team that pursues a common vision?

 Evaluate yourself: Have you assessed your own traits, goals, experience, likes,

dislikes, risk-orientation, and other characteristics. Do they match those of the

franchise?

 Commit: This experience will become a significant part of your life and you need

to invest in the franchise any many ways – time, money and energy.

Part 5: Case Studies

The following text case may be used for lecture and assignments for topics presented in

this chapter.

 Case 3: Cousins Maine Lobster

Part 6: Online Videos and Podcasts

These online videos may enhance class discussion and provide additional insight for the

chapter topics.

 Buying a Franchise vs. Starting a Business 2:08 minutes

 Buying into a Franchise: Learning from Failed Franchisees 1:32 minutes

http://www.youtube.com/watch?v=p2W7p75M0FI

 How to Become a McDonalds Franchisee (New Zealand) 8:38 minutes

http://www.youtube.com/watch?v=d1MfaDFI1Cw

 Brazil Hearts McDonald’s 2:46 minutes

 Fast Foods Gone Global – Keeping Subway Kosher 1:28 minutes

http://www.travelchannel.com/video/keeping-subway–kosher

 Fast Foods Gone Global – What’s Hot in Chile 2:11 minutes

http://www.travelchannel.com/video/whats-hot–in-chile

Links to additional online resources are available on the companion Web site at