FRANCHISING - Assignment #2

 
Questions:
 
1. Becoming an effective and efficient entrepreneur means you must have a characteristic
that can easily cope up with different challenges in establishing a business. If you are to
select which among the stages of franchisees a franchisee must possess most? Justify
your position.
2. Franchise disclosure document or FDD serves as a blueprint between the agreement of
the franchisor and franchisee, if you are to create your own FDD,which among the
inclusions you will prioritize more? Select 5 inclusions which you think is the most
essential for a franchise business to have.
3. Franchisees are still burden with other charges after they have paid the franchise fee to
their franchisor, if you are the franchisor of your own franchise system, would you waive
the marketing collateral charges to your franchisee if they have make an appeal to not to
include them on the marketing activities of the brand?
4. Having sufficient working capital is very vital for each business to continue its
operations.  What type of Franchise financing is advisable to businesses who are in a
Small, Medium and Large enterprises in case they encounter shortage of funds? give 1
example of company in each enterprise. 
5. Companies who have decided not to continue the business they have started cannot just
stop its operation in an instant because they have to consider the welfare of their
stakeholders especially their employees, if you are to recommend exit strategy to a milk
tea shop who have been in its operation for almost 1 year, what exit strategy would you
recommend?
 Becoming an effective and efficient entrepreneur means you must have a
characteristic that can easily cope up with different challenges in establishing a
business. If you are to select which among the stages of franchisees a franchisee must
possess most? Justify your position.

Answer:
To be an effective and efficient leader, a person must possess a great personality, a
resilient one, a positive one, and a very strong characteristic to face any challenges that the
business might encounter in the future. They must be futuristic and goal-oriented because
every action must be monitored and there is always an objective for that every action.
Entrepreneur must be confident about their business because success happens when they
believe in themselves and their goals. Having a strong, positive, and resilient characteristics
will help the business towards achievement especially in franchising. Franchising is like a
human’s life too, it includes different stages and more likely, there is a particular stage where
we must spend our time, efforts, and focus for us to be able to achieve success or to have a
better legacy for our future generation. And in franchising, there are three stages: the starting-
out, established franchisees, and old-timers seeking for retirement. All of these stages are
very important for franchisees to keep in mind but for us, personally, there is a particular
stage that entrepreneurs mus possess most - the starting-out.
Starting a franchise might be just a right one for us entrepreneurs and the very
trickiest stage that must be focus most. Being a new owner of the store, it requires a lot of
training and responsibilities form accounting, to marketing, and administrator. Joining a
franchise without enough skill and knowledge to handle future consequences, might lead to
its failure and closure. Therefore, it is the most important part for entrepreneurs to keep in
mind and to take every guidance, stability and support during this stage, very seriously.
During this stage, every knowledge about the operating system, the brand name, and
marketing are provided to you as a franchisee, so it is very crucial to take note all of those
important information for business in a long run. Although, this stages provides all of the skill
and knowledge for you to be ready in the field, challenges will always come along the way this
stage. So never feel discouraged, and bring out your positive characteristics, with hard work,
patience, and dedication, your franchise will be at its most best and become one of the most
successful franchise that enjoys a long-lasting achievement.
Every business will experience every stages as it grows, adapts, and declines over
the years. It is very important to know and learn those important stages where you as an
individual will help grow too. For every start, there is always new experiences including
unexpected failures, and environment, and requires a lot of energy to be engaged in this
phase. Therefore, this stage will help entrepreneurs build their confidence and characteristics
by overcoming challenges and learning the goals of the store effectively and efficiently.
 Having sufficient working capital is very vital for each business to continue its
operations.  What type of Franchise financing is advisable to businesses who are in a
Small, Medium and Large enterprises in case they encounter shortage of funds? Give 1
example of company in each enterprise..

Answer:
Franchising involves those activities that will largely influence the financial plans of
franchisee, and questions like “how does franchise buyers finance their business?” are very
common to anybody. One of the requirements of franchising is to be able to qualify in paying
start-up capital, this is the time where franchise financing comes in, it shows the importance
of financial investment and other financial options as the store starts to operate. It includes
those options needed when there is shortage of funds too, however, the best franchise
financing depends on the type or size of business enterprise. In the Philippines, there are
different sources of financing that are very common to most franchisees and these are the
franchisor, friends and family, local and national banks, other non-traditional sources like “5-
6”, and the community. There are definitely a need of specific financing for every enterprises
specially today with the evolution of Information Technologies, Small and Medium
Enterprises, and the democratic system of industries and sectors.
Currently, there are different known franchised financing in every small, medium and
large enterprises. To further explain how these enterprises deal with their financial goals,we
will some illustrations from Potato Corner, Gerry’s Grill, and Jollibee, respectively.
For small enterprises like Potato Corner with initial investment that starts at 100,000 -
1 million pesos, the best financing is friends and family loan or Small and Mid-sized
Enterprises (SME) funding programs. This is a financing where you will choose to loan from a
friend or family and repay them in terms of contract. The decisions being made before the
signing, the cut-out and disagreements will be less usual later on. For medium enterprises like
Gerry’s Grill - a famous restaurant here in the Philippines, the initial investment is worth 3
million. Franchise financing for this size of enterprise is with commercial bank loans, a funding
agreement between a business and the bank. It is mostly the option of major capital
expenditures for funding and covering operational costs that were somewhat unable to afford.
And for Large enterprises like Jollibee with initial investments from Php 33-55 Million needs a
franchisor financing. This is a tailored financing strategy done by business owners to
franchisees by going through partnerships or capitals being directly provided. This type of
financing explains the agreement that would possibly take as much of 75% of the debt from
new franchisees. This may involve payments as the business starts but is very reliable as a
payment structure. Businesses that offers this type of financing usually are more reliable
because there is no need to look for further funding since franchisors are much more
experienced in coping up risks and ins and outs of business than other lenders.
Most people are stepping up in business for the first time and this could be the crucial
part for most loans matchmakers for franchise. This is the last stage of planning to complete
the entrepreneur’s dream to come true. Learning different financing would be the very best
thing to consider before jumping into deciding what to take. Of course, the size always matter
and with every financial options, opportunities must be overview as a franchise opportunity to
sustain and establish the franchise business itself.
 Companies who have decided not to continue the business they have started cannot
just stop its operation in an instant because they have to consider the welfare of their
stakeholders especially their employees, if you are to recommend exit strategy to a
milk tea shop who have been in its operation for almost 1 year, what exit strategy
would you recommend?

Answer:
Stages of business always has a decline experience, and when things are getting
really hard, it is important to learn the right path to at least minimized the loses. Exit strategy
is an entrepreneur’s strategic plan to sell the ownership to someone else or to another
company. Entrepreneurs are futuristic and everything is planned including this strategy, but it
does not mean of losing faith to the business but preparing every action to take if this moment
comes. Deciding what exit strategy to choose depends on so many factors like how much
authority or connection are involve to willingly see the business continuously operate, or to
see it shift provided with being paid to give out.
The best type of exit strategy will always depend to the business’ type and size. As
an illustration, a milk tea shop, usually in a business perspective it does need much of an
investment to start but an operation that lasted for a year is a great performance for them. Exit
strategy for this milk tea shop would be by liquidation. Liquidation is an exit strategy for small
business where the operations of the business ends and assets are sold. This strategy is a
clear-cut exit because there is no need for negotiating or to merge the business. It is simply
put to an end and the assets go to the people that the business owe to. Based on our
observation, this happens very often to most milk tea shops and maybe because of
competition. There is a big number of competition to milk tea business and it Is very hard to
build loyal customers because of the demands. So, it would be best to put it on a shift and
sign off the business itself. Although this strategy will make the business not live unlike any
exit strategies, entrepreneurs never lose hope and will find better version of products or
services to sell.
Exit strategy, surprisingly, is planned initially as the business starts. This to give the
right path, the right strategy for business since business owners believe that everything has a
way and solution. However, the effort must be equal to the what type of business it is. Every
exit strategy always depend on it and communication is very important, it maybe to minimized
loses except the liquidation. However, business person believes that there is always a room
for changes but never a room to give up. Liquidation maybe a choice mostly for small
business as an exit strategy but will be a good start to think of something new to the market.