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Franchising - Thesis Example

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Franchising

Researchers have pointed out that the impact of the fast-food restaurant on the society is much greater and therefore the evolving competitive environment is determined by the degree of operational freedom that these franchisees have in adding side dishes to the main menu and so on. This trend has been particularly marked during the last decade from 1999 to 2009.
Modern fast food restaurants that consider making entry into a franchising business would have to adopt a strategy that would enable it to achieve intended results. There are a number of such options available to fast food restaurants such as those direct entry methods, e.g. export buying agency or a trading company and indirect entry methods, e.g. intermediate entry modes such as licensing and franchising (Alon, 2005). It's also desirable to go for a hierarchical arrangement like a merger, an acquisition or a wholly owned subsidiary.
Franchising can be defined as "A form of business organization in which a firm which already has a successful product or service (the franchisor) enters into a continuing contractual relationship with other businesses (franchisees) operating under the franchisor's trade name and usually with the franchisor's guidance, in exchange for a fee" (www.investorwords.com). It is a business model for anyone who wants to start up a business that they don't have an established business idea. Thus franchising has been in existence in over 70 countries worldwide with the sales of US$ 1 trillion. In fact franchisee could be able to run a business under the particular brand name with the cooperation of a franchisor.
When it comes to Subway fast food franchise in USA and it can be considered as one of the constantly growing franchises in the global arena with 32, 131 in 90 countries. Moreover, it is the largest single-brand fast food restaurant chain and holds the second place from largest operators like Yum Brands. Subway mainly operates its business in the US and five other major regions including Europe, Middle East, Asia, Latin America and UK. According to the Subway provides its franchise opportunity to worldwide businesses by fulfilling few steps - research the Subway franchise; submit application; find a best place to locate from the restaurant maps; getting worldwide contact information from regional managers; and getting a capital investment information and find a way to get a loan.
The Subway Fast Food Company is considering entry into the other regions could conveniently adopt one of the latter strategies. In fact existing Subway restaurants that already have a line of fast food items basically operating in the up-market segments could be a good proposition though it has less strategic advantages when compared to operating a wholly owned fast food restaurant. As much as a franchising arrangement with foreign companies might not be feasible, franchising could reduce the degree of operational freedom of the franchised company. Therefore compared to wholly owned fast food restaurants franchised restaurants could be regarded as the best alternative in the competitive business environment. Wholly owned restaurants would enable the management to carry on with some freedom by way of both its competition policy and operational strategy. There is a ...Show more

Summary

Business organizations are those legal entities that engage themselves in the production of a good or service with the intention of selling it for a profit and are much more focused on the long run survival in achieving organizational goals such as profitability, shareholder satisfaction, market share and share price growth, corporate governance, sustainability, market leadership and so on…
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Franchising essay example
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