Franchising
Franchising is:
 A business system in which a company sells
an individual the right to operate a business
using the franchisor’s established system or
format
 It is the granting (giving) of a license to
someone which enables this person to trade
under that trade mark
 The principle is simple: some companies choose
to grow not by developing their production, but
by selling their license to others who then sell
their product or service
It is, in fact, a specialised form of licensing
in which the franchisor (the owner of the
license) sells intangible property to the
franchisee and insists on rules to conduct
the business
In this process a package of services
(including product and trade name) is
offered by the franchisor to the franchisee
in return for payment
There are clear advantages in using
franchising:
You don’t have to come up with a new
idea-someone else has done it for you
Good franchisors will offer
comprehensive training programmes
for developing skills
Good franchisors can also help secure
funding for your investment as well as
outlets when you are in operation
Franchising offers:
The advantage of starting up a new
business quickly based on a proven
trademark and formula of doing business
Franchisors are able to expand their
brand very rapidly across countries
and continents and can have enormous
profits in the process while the franchisees
do all the hard work of dealing with
customers face-to-face
Some disadvantages:
 The main disadvantage for franchisees is a
loss of control. While they gain the use of a
system, trademarks and assistance from the
franchisor, they are required to follow the
system and get approval of changes.
 Another problem is that the franchisor/franchisee
relationship can easily cause litigation (legal
conflict) if either side is incompetent.
For example: a bad franchisee can easily
damage the public’s goodwill by
providing inferior goods and services,
and an incompetent franchisor can destroy
its franchisee by inadequate promotion
or by squeezing them too aggressively
for profits.
The history of franchising:
 Franchising dates back to 1850s. In those
times there were franchising agreements
between hotels and breweries. There was also
the telegraph system which was operated by
various railroad companies but controlled by
Western Union.
 Modern franchising developed rapidly with the
practice of franchise based restaurants: Mc
Donalds has been the most successful
worldwide.
How franchsing works:
Imagine that you’re opening you own Mc
Donalds. To do this, you have to buy the
Mc Donalds franchise. In order to qualify
for a conventional franchise you must
have a large sum of money (not
borrowed). Your total cost to open the
restaurant will range between 430 000 to
750 000 dollars, which goes to paying for
the building, equipment etc.
 Fourty percent of this cost has to be form your
own, non-borrowed fund.
 You will pay an initial franchise fee of 45 000
dollars directly to Mc Donalds.
 Then you must pass a rigorous, nine-month
training period where you’ll learn about: the
quality standards, about service, value,
formulas, method of operation and inventory
control techniques.
 Once you’ve completed training you are ready to
go. The exterior of the building will be complete,
you will have to take care of the interior: kitchen
equipment, seating... You’ll get constant support
from a Mc Donalds Field Consultant, who can
give advice and will visit regularly.
 This is a good system: you pay someone for
their business strategy which, if you are
competent, can earn you big money.
An example: profile of Vanessa Stein
Three yeras ago, Vanessa and her
husband Tom took up the fast food
challenge: they bought the franchise for a
Mc Donalds restaurant near Leeds.
Vanessa gets up at 6.30 and makes a
mental list of her daily activities. She
arrives at her restaurant around 8.30 and
starts dealing with administration.
 Their restaurant is in a retail park around five
miles outside Leeds. They have already
expanded the seating area and they want to
expand the restaurant itself.
 They have to conform to the Mc Donalds
standards (quality, service, cleanliness and
value) but the restaurant is actually their own
business.
 They employ 75 staff, order and pay for
suppliers,take care of maintenance, arrange
local marketing and so on.
Buying this franchise was a big move for
them. Tom had to do nine months’
training before they could even be
considered for a franchise.
Vanessa’s daily routine goes on and by
9.30 she eats breakfast and has a quick
chat with their regular breakfast
customers.
 Then she checks the post which is usually
invoices, bookings for parties and the reports
from inspection.
 These inspectors come as “mystery diners” and
evaluate everything: food quality,
presentation, atmosphere, quality and speed
of service, restaurant cleanliness and so on.
 A field consultant visits them every two or three
weeks, and there are regular meetings with
other franchisees to share ideas and
experience.
The lunchtime rush starts around noon
and, if they’re short staffed, Vanessa also
serves customers.
Her own lunch is a salad or chicken
sandwich. Then she deals with piles of
paperwork and around 3 p.m. she goes
home. She takes some of the work with
her and finishes it in the kitchen.
Suffixes
Adverbs
Look at the way these nouns are formed:
NOUN
STEM + SUFFIX
Assessment (assess + ment)
Effectiveness (effective + ness)
Regularity (reguar + ity)
Administration (administer + ation)
Use the following suffixes to form nouns
out of these verbs and adjectives:












Confidential
Organise
Disagree
Willing
Similar
Careless
Prepare
Present
Popular
Require
Invest
aware
 -ment
 -ness
 -ity
 -ation
Use the nouns you constructed in the
following sentences:
1) Although they are not twins the _______
in the two sisters is striking.
2) I assure you the _______ will pay off.
You won’t have to worry about your profit
in the coming year.
3) The only ________ is that you stick to
the franchisor’s rules.
4) She expressed her __________ and
abandoned the meeting.
5) Not to reveal any business secrets means
that you have to respect the
____________.
6) His ________ to succeed will launch him
to the top of the management ladder.
7) Your _________ must be top quality and
crative if you want to impress your
superiors.
Make nouns by adding the correct suffix to the
following words:

Flexible, dedicate, popular, fit, communicate, agree

1)
Use those words in the sentences:
We are meeting next week to sign the lease _______
for the shop.
Growing ________ of the stress-reducing benefits of
regular exercise has led to an increase in gym
franchises.
Employees who take initiative and constantly seek
ways to improve service are rewarded for their
____________.
Running your own business requires a lot of
_________ as you often have to do whatever is
needed to be successful.
2)
3)
4)
Adverbs are used to complete the meaning of
verbs in a sentence. Match these adverbs of
time to their definitions:
 Always
 Recently
 Eventually
 Already
 Currently
 Sometimes
 Usually
 Not long ago
 After a long time
 By now or before now
 At the present time
 On some occasions
but not all
 On most occasions
 All the time
Complete the passage below with the adverbs:
currently, always, generally, recently,
eventually, already
 By the time the shop opens, the bakery staff
have _____ prepared the daily supply of muffins,
sweet American- style cakes, which are popular
with our early-morning customers who ______
come in for a coffee and snack on their way to
work. After the morning rush, we start making a
selection of fresh sandwiches for the lunchtime
crowd. We are ______ testing the popularity of a
new line of hot Italian-style sandwiches called
“panini”.
Mid-afternoon, when business slows
down, I __________ spend an hour or two
checking supplies and placing orders for
the next day. _______, our sales have
risen considerably, probably as a result of
the ads we’ve been running in the local
newspaper. If business continues to grow
at the same pace, we may _______
expand our premises to include more
seating.