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FRANCHISING, DECEMBER 30, 2008 – JANUARY 4, 2009
Take-Home Exam
Write a descriptive paper (not more than three pages, single space, 12 cpi font) on franchising. In your paper, highlight the following terms/concepts/phrases:
Resource constraints, monitoring costs, promotion efficiencies, self-motivated, royalties as a percentage of sales and not profits, fixed royalty amount versus a percentage of sales royalty, goal incompatability, conflict, power-dependence in franchise relationships, area development, encroachment, master franchising, business format franchising, company-owned outlets, franchised outlets, advertising fee, franchise contract, tying (tie-in) arrangements, channel functions, mode of entry into international markets, risk transfer, economic impact of franchising, geographical mobility, free-riding, termination, cost of termination, renewal, the right to first refusal, growth by adding new units, local expertise, system-wide adaptation in response to environmental opportunities/threats, international, loss of control, synergistic benefits of having a mix of company owned and franchise outlets, developmental aspects of the franchisor-franchisee relationship, territorial exclusivity, multi unit ownership through sequential expansion, real estate ownership, single owner-operated franchise systems.
The above terms are not listed in any particular order. Italicize the above terms in your paper.
Control: The main disadvantage of franchising is a loss of control for a franchisee. Even though they gain the use of a system, trademarks, assistance, training, marketing, the franchisee is however required to follow the protocol and get approval for changes from the franchisor. This at times could be annoying and restrict the creative instincts of the franchisee.
Price: Once a Franchisee has been started, it carries some basic business expenses. In choosing to adopt the standards set by the franchisor, the franchisee often has no further...