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"Being first does not necessarily mean being the biggest. Discuss the issues of growing into a large business operation through franchising."

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Introduction

"Being first does not necessarily mean being the biggest. Discuss the issues of growing into a large business operation through franchising." In this essay, I will be discussing, analysing and evaluating the issues of growing into a large business operation through franchising. By doing this, I will be giving and combining examples of large franchise operations, which are functioning today, that are not necessarily the largest and then analysing and evaluating them in context with my given essay topic. Also, before I begin my argument, I will briefly explain what franchising is and what it entails. A franchise is a legal and commercial relationship between the owner of a trademark, service mark, trade name or advertising symbol and an individual or group seeking the right to use that identification in a business. Generally, a franchisee sells goods or services supplied by the franchisor or sells goods or services that meet the franchisor's quality standards. Franchising is based on mutual trust between the franchisor and franchisee. The franchisor provides the business expertise (i.e., marketing plans, management guidance, financing assistance, site location, training, etc.) that otherwise would not be available to the franchisee. The franchisee brings to the franchise operation the entrepreneurial spirit and drive necessary to make the franchise a success. Wimpy, the fast food chain, first appeared on Britain's high streets in 1954. Today, Wimpy is the largest 'independently' owned, franchised restaurant chain in the UK. However, regardless of Wimpy being in the UK fast food market for over 50 years and being the first to enter the fast food market in the UK by offering their franchisees the proven business notion, currently, they barely have 300 outlets and they are not the largest fast food restaurant chain in Britain. ...read more.

Middle

The appeal of the Subway chain's franchise system is universal with low investment, simple operation and unparalleled support for franchisees. Therefore, entrepreneurs have learned that when it comes to ensuring success, the best way is Subway. Subway believes that the main reasons why they have been such a huge success are primarily because of its low start up costs, flexible space requirements and ease of operation, as well as offering a wide range of services to their franchisees. Even though Wimpy was established way before McDonald's and Subway in the UK fast food chain, they are still a long way behind them in terms of profitability, success, recognition and market share. While Wimpy did adopt the correct expansion strategy via franchising, I believe that they did not explore profoundly enough the UK fast food consumer market, unlike McDonald's and Subway who went to great lengths to make sure that they did. Also, in comparison with McDonald's and Subway, Wimpy's potential franchisees are not getting the same opportunities to develop their franchising expertise, as Wimpy are not providing the same quantity and quality of franchising aid and service support. Not to mention the non-existent publicity it endures, which results in a huge lack of consumer awareness. In contrast, McDonald's are always in the media spotlight with constant television advertising coverage, such as the ever popular "I'm lovin' it" campaign, and constant innovative ranges of food made available in their restaurants. In regards to Wimpy's huge lack of consumer awareness, Subway on the other hand, persistently informs their existing and potential customers of their fast food outlets, which only provides healthy and natural ingredients within their menus. ...read more.

Conclusion

Using the example of Subway in the UK, it has also shown that a potential franchisee can also become a potential franchisor itself and create a network of franchisees abroad. Statistics gathered recently by the British Franchise Association, indicates that there is only a 5 per cent danger of bankruptcy via a franchise network, and a whopping 95 per cent chance of franchisees surviving five years later. This proves that franchising is a fantastic opportunity to develop a business. (http://www.britishfranchiseassociation.co.uk/). As already explained, Wimpy is a great example of a franchisor that provides its potential franchisees with any assistance and advice they may need in opening and functioning their units. Wimpy does this by personally giving its successful formula to its franchisees, which basically allows them to obtain complete authority of their units, along with Wimpy's support, business experience and expertise in its franchising knowledge. Wimpy offers all of this to its potential franchisees because they take immense care in their judgment of franchisee motivation, commitment, dedication and work ethic to its objectives of business success. In regards to McDonald's, due to their giant status and powers of profit making, it is safe to say that they provide the most effective and efficient franchisee programmes, which includes its reliable service support and expertise for success. On the other hand, Subway specialises its service support to its potential franchisees via expert training. This has resulted in its huge success in the UK and is the main reason why it has overtaken Wimpy's UK market share, regardless of it being established in the UK fast food chain more than forty years later. Having explained the benefits of franchising, potential franchisees must take careful consideration with a professional outlook of the franchising world, in order to see and be aware of the potential risks connected with this particular business strategy of prospective business success. ...read more.

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