Partnerships and Franchises

Objectives/Standards

• Compare and contrast different types of partnerships

• Analyze the advantages of partnerships • Analyze the disadvantages of partnerships• Explain how a business franchise operates • Standards: 3.1, 3.2, 3.9

Vocabulary

• Limited liability partnership- a type of partnership in which all partners are limited partners

• Limited partnership- a type of partnership in which only one partner is required to be a general partner

• Assets- the money and other valuables belonging to an individual or business

• Business Franchises- a semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area

Vocabulary Con.

• Royalties- the share of earnings given by a franchise as payment to the franchise

• Business Franchises- a semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area

• General Partnership- In this type, all partners share equally in both responsibility and liability.

Advantages of Partnerships

• They are easy to establish • Fewer government regulations • Makes it easier for entrepreneurs to start a

business • Inexpensive

Disadvantages of partnerships

• Limited liability • Not permanent • Conflict between businesses

Advantages of franchises • Management training and support Franchisers help owners gain experience they need to succeed with

training and support programs • Standardized quality Franchise owners have to follow certain rules and process to guarantee

product quality • National advertising programs Companies pay for advertising companies to establish their brand names• Financial assistance Franchisers provide financing to help franchise owners start their

business• Centralized buying power Franchisers buy materials for all their franchise locations

Disadvantages of franchises • High franchising fees and royalties Buying a franchise is not cheap Franchisers often charges high fees for the right to use the company's

name • Strict operating standards Franchise owners must follow all the rules laid out in the franchising

agreement for such matters as hours of operation employee dress code and operating procedures

If they don’t the owners may lose their franchise • Purchasing restrictions Franchise owners must often buy their supplies from the parent

company or from approved suppliers • Limited production line Franchise agreements allow stores to offer only approved products Franchisers usually can not launch new product lines that might appeal

to local customers

Chick fil a

• Top Competitors McDonalds Popeye'sYum!

Financial report

• Annual sales: 5 billion $$• 1200 standing businesses • 300 mall restaurants • 2012-2013: 4.9%• 2013-2014: 3.5%• Significant decline of 1.4% from the year 2012-

2014

Elastic graphs

V.S