Chapter 4 Franchising and the Entrepreneur

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Chapter 4 Franchising and the Entrepreneur

Franchising is an important part of American business and this powerful distribution and marketing system is also influencing the global economy. Franchising can be traced to Civil War times, when Isaac M. Singer devised a more efficient, less expensive way to sell his Singer sewing machines through franchised outlets. Retail outlets dominate franchising, but increasing demand for consumer and business services is producing a boom among service-oriented franchises.

The Franchising Boom!
Franchising has experienced exponential growth rates in the United States and abroad and its growth in recent years is phenomenal. Franchising is a major reason for U.S. business growth and dominates industries such as lodging, real estate brokerage, quick-serve restaurants and convenience stores and is become increasing poplar in other industries

Global Franchising
Franchises account for more than 50 percent of all retail sales, totaling more than $1.4 trillion. More than half of U.S.-based franchise companies support international operations and 30 percent of their franchise units are located on foreign countries. The markets to watch include Europe and Pacific Rim countries.

Franchising - Defined
Franchising describes a semi-independent business owners that pay fees and royalties to a parent company in exchange for the right to sell its product and services under the franchiseer’s trade name and often to use its business formant and system. Franchisees buy a “success package” from the franchisor that shows them how to use it. Franchisees, unlike independent business owners, do not have the freedom to change the way they run their businesses. Successful franchisors claim that neglecting to follow the formula is one of the chief reasons that franchisees fail. Because franchisors develop the…...

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