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Copyright © 2019 Pearson Education, Inc.
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
Copyright © 2019 Pearson Education, Inc.
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)
Copyright © 2019 Pearson Education, Inc.
Chapter 8, Page 131
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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Chapter 8, Page 132
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)
Copyright © 2019 Pearson Education, Inc.
Chapter 8, Page 134
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)
Copyright © 2019 Pearson Education, Inc.
Chapter 8, Page 135
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
