STHM 1311 Lecture Notes - Lecture 1: Market Entry Strategy, Franchising, Exaggeration
6 Apr 2016
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Potential disadvantages of franchising for the franchisee. Have to follow corporate pricing (see franchisee vs. mcdonald"s value menu) May not have exclusive right to territory. May have to expand or die (if sales hit key volumes may be told that if you don"t buy a second franchise for that market the franchisor will find someone who will) An opportunity to expand the brand using other people"s money. Expansion both domestic and international-franchising is also a market entry strategy. Income stream from franchise fee, royalty payments, marketing fees, etc. Income stream from captive" relationship between franchisor and franchisee. Mcdonald"s role as landlord (sec 10k, 2/24/15) as described in the narrative. Under a conventional franchise arrangement, the company owns the land and building or secures a long-term lease for the restaurant location and the franchisee pays for equipment, signs, seating and d cor.
