Franchises and corporate-owned stores both result from the parent company’s success and desire to grow. Expanding via a franchise-based store enables the parent company to duplicate its brand without assuming most financial and management risks. Franchising also provides an additional source of capital.
What is a franchise business?
How does a parent company profit from franchises?
Why are franchise owners not responsible for advertising?
What is franchise agreement?
What is required of a local party in a franchise agreement?
Why is it important to be a franchise owner?
How do corporations achieve growth?
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Franchise vs Corporate
Franchises and corporate-owned stores both result from the parent company’s success and desire to grow. Expanding via a franchise-based store enables the parent company to duplicate its brand without assuming most financial and management risks. Franchising also provides an additional source of capital.
managing a franchise vs corporate-owned store
Franchises and corporate-owned stores have similarities and differences in how they operate on a daily basis. Consider the following:
1. Day-to-day operations
Whether the store is a franchise or a corporate-owned store operated by a retail manager, the nuts and bolts of the operation are the same. Typical day-to-day retail store operations include sales and customer service. Store inventory and merchandising functions get products on the shelves.
2. Hiring and staffing
Whether you operate a corporate-owned retail store or a retail franchise, XpertHR notes that ideal candidates have a certain desirable combination of attributes. Even if their skill set doesn’t match up, their “soft skills” are an advantage, and they can learn the job logistics.
3. Marketing and sales
Corporate-owned retail stores and franchise stores have two things in common: Both types of stores have coordinated, brand-centric marketing programs that are carefully crafted at corporate headquarters or with an industry-savvy marketing agency.
4. Inventory management and accounting
Besides sales and customer service, every retail store engages in three major functions: product purchasing, inventory management, and store accounting. Employees in corporate-owned stores and franchises take a similar hands-on approach to getting inventory onto store shelves so it’s ready for purchase.
5. Auditing a franchised vs corporate-owned store
Franchises and corporate-owned stores follow a similar audit process. A district or regional manager typically comes in to evaluate certain components and programs using preset criteria, checklists, and guidelines.
Why do you buy into a franchise?
Buying into a franchise normally gives you a better opportunity to generate customers and grow your business right away. When you stick the name McDonald's, Ace Hardware or Jiffy Lube on your front door, you have immediate recognition in the marketplace. You benefit from the brand recognition the franchisor has earned. Some franchisors offer initial support in selecting a business location, training your employees and getting your business going. When the company invests in marketing, you get the benefits from that as well. You may also save money buying from franchise suppliers.
What does franchising do?
Some franchisors offer initial support in selecting a business location, training your employees and getting your business going. When the company invests in marketing, you get the benefits from that as well. You may also save money buying from franchise suppliers.
What happens if a sole proprietorship is sued?
In essence, if your business is sued, your individual assets and earnings are at risk. Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007.
Is it easier to start a sole proprietorship or a business on your own?
Since you are starting the business on your own, you get to decide where to put it, how to market it, how to maintain it and what products and services to sell. Sole proprietorships are also easier to set up and run.
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Why is sole proprietorship the simplest business to start?
Because the owner and the business are one and the same, all of the income and expenses go straight to the owner. The owner then reports those on their personal income tax forms.
What is partnership in business?
A partnership is a business wherein two or more individuals share the management, profit and liability for the company’s debts.
What are the disadvantages of a partnership?
Just like a sole proprietorship, the partners assume all liability for the debts incurred by the partnership. In addition, the partners may become deadlocked and unable to cooperate in the running of the business.
What is a corporation?
A corporation is a legally defined type of business in which the business itself is considered a “person” under the law. The corporation itself is liable for the business’s debts. This relieves the corporations owners of much of their own personal liability.
What are the disadvantages of sole proprietorship?
Disadvantages. In a sole proprietorship, there’s legally no difference between the business and the owner. Therefore, all of the owner’s private possessions are at risk if they are needed to pay the business’s debts.
What are the advantages of owning a corporation?
Advantages. Owners of the corporation, called shareholders, have a limited liability. They risk only the money they have invested in the corporation. Shareholders can also sell their shares to someone else. In this way, they can end their ownership of the business.
Do you have to incorporate to start a business?
You don’t have to incorporate to start a business. Sole proprietorships are the simplest and fastest way for an individual to get into business. In some locales, you don’t need to do much more than to just start offering your products and services for sale. However, a sole proprietorship offers no liability protection.
What is a franchise business?
A franchise is a small business. The franchise owner pays the parent company a fee along with ongoing royalties to operate under the parent company. Owners benefit from the parent company's reputation and advertising, as well as ongoing training that helps them start and grow their own franchise locations.
How does a parent company profit from franchises?
The parent company profits by collecting franchise fees from the various locations, while also using its locations to promote its brand. By opening more franchise locations, the parent corporation expands and enjoys a larger share of profits.
Why are franchise owners not responsible for advertising?
Franchise owners aren't responsible for all of the business advertising because most national franchises are well-established and invest in national advertising campaigns that make it easier for new owners to compete.
What is franchise agreement?
An individual or company enters into a franchise agreement to run a local business under a parent company's larger brand. The parent company gives permission to a local owner to use its name and products.
What is required of a local party in a franchise agreement?
The local party may be required to meet certain standards that the parent company sets. It may also have to purchase products from the parent company. All of this depends on the terms in the franchise agreement.
Why is it important to be a franchise owner?
Being a franchise owner is desirable for many people who want to run a business but don't want to create a new company from scratch. Proper research is essential so that you know exactly what you're getting into.
How do corporations achieve growth?
Corporations achieve growth by acquiring capital and having successful sales, marketing, and product development strategies. A corporation that operates as a franchise seeks to grow using private investors and other companies that purchase franchise locations.