Lead-inQuestions•Whatdoyouthinkaretheprincipaladvantagesanddisadvantagesofthefranchisesystemforafranchiserandafranchisee?RelatedExpressions•franchisor•franchisee•franchisefee(frontendfee)•royalty•managementservicesfee•advertisingfee•operationalmanual•masterfranchisee•trademark•productfranchising•tradenamefranchising•businessplanWhatisafranchise?•Licensetouseanestablishedbrand•Useisveryrestrictive–manyrulestobefollowed.•Provideaprovensuccessfulbusinessformat•Entrepreneurshipforpeoplethatarenotparticularlyentrepreneurial.AdvantagesofFranchising•Buyinganame/reputation•Establishedmarkets•Technical/managementassistance•Standardizedprocedures•Qualitystandards•Selectionoflocation•Facilitydesign•QuickercashflowDisadvantagesoffranchising•Lossofindependence•Highinitialfees•Highroyaltiesandadvertisingallowances•Contractualrestrictions•Inapplicableadvertising•Terminationclauses•Notreceivingpromisedhelp•Unsuitableproducts•LackofcompetitiveadvantageTheFranchisee’sPerspectiveThingstoLookFor1-15ProvenoperatinglocationCredibletopmanagementSkilledfieldsupportstaffAtradeidentityAproprietaryoperationsmanualEffectivetrainingprogramsDisclosureandofferingdocumentsPlansforadvertising,marketing,PRandpromotionAcommunicationssystemSufficientcapitalFranchisingAgreements1-16IssueQuestionstoResolveFranchisefeeAmount?Onetime?Perunit?RoyaltiesAmount?Percentageofnetorgross?Slidingscale?QualitycontrolQualityspecs?Monitoringpractices?Rewards?Sanctions?AdvertisingFee?Localbudget?National?Intensity?Messages?OfferingsProductline?Productmix?Requirements?Alternatives?EquipmentRequired?Additional?Financing?LocationSiteselectionrequirements?Franchisoraid?Financing?OperationsSigns?Hours?Maintenance?Décor?Personnelpolicies?ReportingTypes?Frequency?Auditing?Sanctions?FranchiseeGuidelines©1999byPrenticeHall1-17Performaself-evaluationInvestigatethefranchisorStudytheindustryandcompetitionStudytheUniformFranchiseOfferingCircularInvestigatethef...