Friday 23 August 2013

business consulting firms


LET’S face some facts about McDonald’s: It does not offer the best burger, there are better available; the service is no different from any other self-service restaurant; and, the ambience of the place is in close competition with those offered by, say, Burger King, Wendys, Wimpys, KFC and the like. So what is it that really makes McDonald’s one of the most popular eateries in the world? What is it that attracts us to the American fastfood joint that is run by mere school kids? Is it the food? Is it the service? Or is it the ambience? Perhaps, it is a winning combination of a simple menu, a speedy preparation and delivery system based upon assembly line techniques, and more importantly, a system so well-defined that anybody, even teenagers, can run it to such perfection as to deliver a high-level of consistency that has become the trademark of each of its restaurants around the world. It is franchising at its best! business management service Origin of franchising It all started in the 1800s, in England. In those days, due to the rampant alcohol abuse by the public, the sale of liquor was restricted by a system of licensing. It became essential for inns and taverns to obtain licences to sell liquor. But only a few could afford them, while the rest found it difficult to maintain their premises. At this juncture, the brewers came forward to help the innkeepers financially. In return they asked that only their brands be sold by the inns. This gave the brewers a guaranteed distribution system for their ale, and the tavern owners procured an unfailing supply of brew by owning exclusive distribution rights on their specific brands of ale. This actually proved to be a win-win situation for both. Old England may have taken the lead in instituting franchising, but if one were to award the crown for the father of franchising, the United States would be the recipient! These and more interesting facts are revealed about franchising in the first book on the subject in India, The Science of Reproducing Success. The basics of franchising are simple. A franchisor is one who has a successfulbusiness model and wants it to further grow and expand. The method of expansion here is through opening more similar units, called franchises. For this, the franchisor accords the right to another entrepreneur, i.e., afranchisee, to replicate the franchisor’s business model with his own capital. For this transfer of rights and also the blueprint of the successful business model, the franchisor charges the franchisee a fee and, later on, royalty. The former also provides the latter support in the form of training, advertising, marketing campaigns and so on. business services directory Franchising as a concept Franchising is one of the fastest growing methods of doing business in the world today. It begins with a vision, of growth and expansion. With the addition of the franchisee in the franchise chain, the franchisor gets more of these resources. This is because the franchisee uses his own capital for the franchise, and addresses the issues of recruitment, retention and motivation of staff or agents and of overall management of the business. The franchisor also gains time as the allotment of franchises helps in expanding his business more rapidly than other traditional methods of expansion. Thus, franchising has outgrown the narrow concept of marketing a product or a service through its distribution channels. Today, it provides a complete business solution that involves m a n a g e m e n t , accounting, finance, e c o n o m i c s, quantitative analysis and marketing. Company-owned versus franchising An entrepreneur might ask, “Why should I go in for franchising when I can open my c o m p a ny - ow n e d units.” It is true that that companyowned units display some clear advantages, when compared to franchising, such as: • More control over units. • No sharing of profits. • Ease of instituting changes in units. • Ease in testing new products or services. • Ability to change the basic products • Ability to even change the mission or goal of the organisation. • By virtue of ownership, company headquarters can easily control the reporting system, managerial system, and marketing system of all its units However, there are disadvantages of company-owned units: • Company-owned businesses require lots of capital due to cost of maintaining and developing units. • Business partnerships that look fruitful in the beginning, quite often do not work in the long-term. • They require a fairly extensive managerial team to oversee and control them and their activities. • Difficulty in finding and keeping good motivated managers. • The age-old marketing channel of distributors, aamong others offer no control and little influence over how the products and services are being distributed. Franchising advantages • The franchisor provides the franchisee an opportunity to operate a tested, proven, and profitable business and in addition provides him support services and training that increase his chances of success. business consulting firms • Franchising allows for intensive and rapid expansion of a regional or national business system. • A franchise generally requires fewer management personnel than a chain organisation and therefore, has a lower staff payroll and problems. • When a franchisee invests his own money in a f r a n ch i s e, c o m m i t m e n t follows. Unlike a salaried manager, a franchisee generally prides his ownership and is self-motivated in operating a successful business. Franchising disadvantages • Franchising is not a miraculous problem-free solution to business expansion. It is an excellent opportunity to expand with the assistance of other individuals, their investments and drive. • Net receipts from franchisees could be less than net receipts from company-owned operations. Only a few new franchises break even immediately, most take up to six months to a year. • Business skills required to operate a franchise are at variance with those required for running a retail store. • A franchisor needs to realise that they are now working with several independent business people who have their ideas and ways of doing things.

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