Franchising and Business Success: A Comprehensive Analysis

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ASSIGNMENT QUESTIONS

FRANCHISE
According to O’Neill (2017), Franchising is the marketing strategy used by certain businesses to expand
their businesses in different or similar markets. The Franchisee can use the brand value, brand equity
and name of the brand, intellectual property rights and business models of the franchisor at a certain
price and some legal and other set obligations that the franchisee needs to follow (Giordano-Bibby,
2018).
McDonald's is among the best example of franchising market strategy to expand its business worldwide.
Almost 90% of the McDonalds outlets around the world are owned by a franchisee. It adopted a
different and creative franchise model that partners with local entrepreneurs of diverse markets that
share the values of McDonald's and adds a local touch to their branches. In this way, McDonald adopted
a glocalization policy to renew its services and to reach the communities worldwide (Rodrigues, Nikhil,
and Jacob, 2016).
Theoretically, a business can be franchised anytime but the best stage for franchising the business is
when the business is stable and is financially successful for around a year. By checking the stability of the
business and its financial successes, the business can attract buyers and franchising can be successful. It
is important to adopt franchising when business is steady because franchising requires time, dedication
and commitment as well as finance and other resources. If the main business faces a problem, opening a
franchise can even result in the liquidation of a business. Another factor that needs to be looked at
while franchising is business should be at the stage that it can be sellable. It should make enough profit
to allow the main business and its franchise to succeed. It is important to consider that franchising can
be adopted at the stage where a business can be replicated and the same business model and policies
can provide profit to the franchise (Chen, 2018).
Franchising a business can provide the business with many advantages like expansion and growth of
business without investing in the inventory and management and recruitment of employees. Franchising
creates brand awareness as well as increases income profit through royalty fees, even if the franchise is
at loss. The creative and skilled franchisee can provide innovative and different ideas to expand the
business and also it can help in creating a web of networks to grow business further (Sun and Lee, 2019).

TIMING
Timing is a very integral factor in the successful launch of any business. Any business or new products
and services that are launched at correct timing become successful and celebrated while at the wrong
timing, the same idea can become dud. What's important is to learn the market demand and trends
before launching a business. Movies, game shows, and other entertainment services are more
successful at the holiday and festivity season while launching the business when the right timing is
wrong can result in converting all the efforts into white noise. Timing is a very crucial factor from the
launch of the business, to the launch of new product or service, to hiring new employees, to advertise
and promote because timing can play a huge factor in deciding success or failure of a business (LaBov,
2014).
Other than timing, some other factors that are important to consider at the time of business launch are:
Knowledge of the market:
It is very crucial before the launch of the business to know the market. It includes knowledge about
suppliers, distributors, and competitors. It is important to develop a good relationship with the suppliers
and distributors to create networks before the launch of business (DeMers, 2015).
Understanding the potential customers:
To know customers before launch is important because customers decide the fate of business after
launch. So, it is important to consider the knowledge about customers, their purchase decisions and
their areas of influence to successfully launch a business (DeMers, 2015).
Adequate capital and cash reserves:
To have a successful launch and growth and stability in business, it is necessary to maintain an estimated
cash flow statement of the business and find the sources of capital. A launch can be successful if
unwanted expenses are avoided. Cbiz's Henley commented that businessmen should avoid long-term
lease and other long-time commitments to reserve resources and capital as at the growth period of the
business, many contingency and uncertainties arise that require resources (DeMers, 2015).

Testing the idea before launch:
It is very necessary to test the idea before launching a business to be sure that the idea will be successful
after the launch of the business. Market research is necessary to know the point of view of people and
to test that the idea is positively taken by the people (DeMers, 2015).

OPPORTUNITY-DRIVEN OR NECESSITY-DRIVEN ENTREPRENEURSHIP
Opportunity-driven entrepreneurship refers to the type of entrepreneurship where a person takes
advantage of the opportunity to develop business and earn the profit. In opportunity-driven
entrepreneurship, businessmen research the market and create a business idea that can fulfill the needs
and demands of the consumers by using innovative technologies and new ideas. In this era of
technology and globalization so many opportunity-driven entrepreneurial ventures are starting. Many
social apps and other common platforms are all examples of opportunity-driven entrepreneurship.
Google, WhatsApp, food delivery apps, payment apps and there are many more in the line (Tipu, 2016).
Necessity-driven entrepreneurship refers to the type of entrepreneurship where a person does not have
any other option to satisfy his and his family's needs. In necessity-driven entrepreneurship, businessmen
start the business because there are no other options available to them. Necessity-driven
entrepreneurship's best examples are uneducated farmers or traders. For example, James is a farmer
who farms in his family land. All the farming activities from buying seeds to the selling of crops are done
by James. This makes James, a necessity-driven entrepreneur because he is farming, not because of the
opportunity but because he needed farming for earning a livelihood and has no other options (Hui et al.,
2018).
Tulaa is a Kenyan start-up established in 2017. It is an opportunity-driven entrepreneur venture that
provides a digital platform and uses artificial intelligence to connect rural African farmers to the input
suppliers and buyers to buy and sell crops online as well as it also provides small farmers credit for
farming. Tulaa is an opportunity-driven entrepreneurship because the founders of the start-up saw the
opportunity and need of these farmers that needed funds and a platform to easily access their suppliers
and buyers and created a business that facilitates them. This created a social start-up that fulfills social
responsibility as well as earns a profit (Tulaa, 2019).

REFERENCES
Chen, Y.S., 2018. Using Business Analytics in Franchise Organizations. In Encyclopedia of
Information Science and Technology, Fourth Edition (pp. 930-941). IGI Global.
DeMers, 2015. The 10 Most Critical Factors That Dictate Startup Success. Online available at
(https://www.entrepreneur.com/article/252813), last accessed on August 10, 2019.
Giordano-Bibby, 2018. FRANCHISING YOUR BUSINESS FAQS. Online available at
(https://hjsolicitors.co.uk/article/franchising-business-faqs/), last accessed on August 10, 2019.
Hui, J., Toyama, K., Pal, J. and Dillahunt, T., 2018. Making a Living My Way: Necessity-driven
Entrepreneurship in Resource-Constrained Communities. Proceedings of the ACM on Human-
Computer Interaction, 2(CSCW), p.71.
LaBov, 2014. Timing is Everything: The Deciding Factor between Success and Failure. Online
available at (http://www.jetsetmag.com/exclusive/business/timing-is-everything/), last
accessed on August 10, 2019.
O’Neill, R., 2017. Franchising. Busidate, 25(2), p.3.
Rodrigues, J., Nikhil, S. and Jacob, S., 2016. Promotional Strategies of McDonalds and Market
Effects. Journal of Management Research and Analysis, 3(1), pp.53-55.
Sun, K.A. and Lee, S., 2019. Competitive advantages of franchising firms and the moderating
role of organizational characteristics: Evidence from the restaurant industry. International
Journal of Hospitality Management, 77, pp.281-289.
Tipu, S.A.A., 2016. Comparing the behaviour of opportunity and necessity driven entrepreneurs.
International Journal of Entrepreneurship and Small Business, 27(1), pp.84-107.
Tulaa, 2019. Online available at (https://www.tulaa.io/index.html#solution), last accessed on
August 10, 2019.