Franchise Assesment Case Study

Group 5

Case 6.2

Checking it out – A Franchise Case study

Introduction

This case study is about a lady named Arlene, who inherited $150,000 from her grandfather and decided to start her own business.

She is a legal secretary at a law firm and has 14 years of experience.

Arlene thought deeply about what she would like to do with the money and how she should invest it, till one day an ad caught her eye and saw the advert for a fast food chain that was selling its franchise.

Before we go ahead and explain what has happened and our recommendations, we would like to briefly explain the definition of Franchise and franchisee.

FRANCHISE:

A type of license that a party (franchisee) acquires to allow them to have access to a business's (the franchisor) proprietary knowledge, processes and trademarks in order to allow the party to sell a product or provide a service under the business's name.

FRANCHISEE:

The party in a franchising agreement that is purchasing the right to use a business's trademarks, associated brands and other proprietary knowledge in order to open a branch. In addition to paying an annual franchising fee to the underlying company, the franchisee must also pay a portion of its profits to the franchisor.

Information about the Franchise

An event was conducted at one of the hotels convention hall, and a spokesperson for the franchise was available along with a few of the franchisers. Arlene came to know more about the franchise and was very pleased. The information provided by the franchise spokesperson was that it’s a newcomer in her area and that there are 111 franchises through out the nation, 26 in her state.

There was financial information provided such as the cost of franchise being &75000 plus a 4 percent gross revenue.

The spokesperson also said that there will be site location and personnel training assistance provided. The spokesperson also encouraged all attendees to ask questions and investigate before taking any decisions.

The following is the information that was provided in points:

• Fast-food chain.
• The franchise is a Newcomer in her area.
• 111 franchisees throughout the nation and 26 in her state.
• Cost: $75,000 + 4% of gross revenues.
• Site location and personnel training assistance will be provided

Franchise assessment

Arlene liked what she heard , however she wanted to do a background check herself since she has been working in a law frim and has a lot of experience.

She asked the spokesperson for a list of franchisees and if she could contact them, however he said that he doesn’t have a list with him and that he could write a few contacts for her on a paper.