View
5.279
Download
0
Embed Size (px)
DESCRIPTION
Do you know what model to choose in your Life and Business?
Citation preview
Pros and Cons of Pros and Cons of Business Models Business Models
By Val A. Slastnikov,By Val A. Slastnikov,
Business Models ExpertBusiness Models Expert© 2010 Digitizer Group. All rights reserved© 2010 Digitizer Group. All rights reserved
PART SEVENPART SEVEN(Pros and Cons (Pros and Cons Of Franchising Of Franchising
Model)Model)
What is Franchising?What is Franchising?
FranchisingFranchising is a method of doing is a method of doing business wherein a "franchisor" business wherein a "franchisor" authorizes proven methods of doing authorizes proven methods of doing business to a "franchisee" for a fee business to a "franchisee" for a fee and a percentage of sales or profits.and a percentage of sales or profits.
Is Franchising for you?Is Franchising for you?
Who belongs in this Who belongs in this category?category?
Any type of a Franchise Owner Any type of a Franchise Owner (“franchisee”) if you are not a (“franchisee”) if you are not a
FranchisorFranchisor
Do you have what it takes Do you have what it takes to be a Franchise Owner?to be a Franchise Owner?
““Franchising” Franchising” Pros Pros
Franchise
Leverage:Yes
Franchisor’sModel
Franchisor’sSuccess
Franchisor’sTraining
““Franchising” Franchising” ConsCons
Franchise
Control:
No
Customer Base:
Limited
Startup Costs:
High
Carrying Costs:
High
Scale-ability:
No
Growth Potential:
Limited
Replic-ability:
No
Multiple Income
Streams:
No
Profit-ability:
Limited
Level of EffectivenessLevel of Effectiveness
Pros: Pros: 11 Cons:Cons: 9 9
Level of Effectiveness = 10%Level of Effectiveness = 10%
Franchise
Leverage:Yes
Franchisor’sModel
Franchisor’sSuccess
Franchisor’sTraining
Franchise
Control:
No
Customer Base:
Limited
Startup Costs:
High
Carrying Costs:
High
Scale-ability:
No
Growth Potential:
Limited
Replic-ability:
No
Multiple Income
Streams:
No
Profit-ability:
Limited
Analysis Analysis
Franchising Facts:Franchising Facts:
Franchise is a legal and commercial relationship Franchise is a legal and commercial relationship between the owner of a trademark, service mark, between the owner of a trademark, service mark, brand name, or advertising symbol (the franchisor) brand name, or advertising symbol (the franchisor) and an individual or organization (the franchisee) and an individual or organization (the franchisee) wishing to use that identification in a business. wishing to use that identification in a business.
The franchise governs the method of conducting The franchise governs the method of conducting business between the two parties. business between the two parties.
Generally, a franchisee sells goods or services Generally, a franchisee sells goods or services supplied by the franchisor or that meet the supplied by the franchisor or that meet the franchisor's quality standards. franchisor's quality standards.
AnalysisAnalysis
Advantages of Franchising:Advantages of Franchising:
Established Brand and Customer BaseEstablished Brand and Customer Base Marketing SupportMarketing Support Business SupportBusiness Support Training SupportTraining Support Access to Proprietary MethodsAccess to Proprietary Methods Reduced RiskReduced Risk
Analysis Analysis
Disadvantages of Franchising:Disadvantages of Franchising:
Initial Payout Initial Payout Royalty Payments Royalty Payments Marketing/Advertising Fees Marketing/Advertising Fees Limited Creativity/Flexibility Limited Creativity/Flexibility Sole Sourcing Sole Sourcing Long-Term ContractLong-Term Contract Dependent on Franchisor Success and Dependent on Franchisor Success and
Reputation Reputation False Expectations False Expectations
QuoteQuote ““Why would anybody go out and spend Why would anybody go out and spend
$50,000 on a franchise to makes $50,000 on a franchise to makes whateverwhatever when you can just start a when you can just start a business with no capital out of pocket business with no capital out of pocket and and way more scalableway more scalable?” ?”
– – Brad Fallon, a Co-founder of Brad Fallon, a Co-founder of StomperNetStomperNet
TakeawaysTakeaways ““If you are a real entrepreneur – then franchising may not be If you are a real entrepreneur – then franchising may not be
for you. Real Entrepreneurs don’t own franchises – they for you. Real Entrepreneurs don’t own franchises – they choose their own path to success.choose their own path to success.
All franchises are “screening out” entrepreneurs because they All franchises are “screening out” entrepreneurs because they don’t want them to mess with existing model.” don’t want them to mess with existing model.” – Rich Schefren– Rich Schefren
Where do you go from Where do you go from here?here?
CLICK HERE TO GO TO
PART EIGHT