Franchise vs. Non-Franchise Research Paper Example | Topics and Well Written Essays - 1750 words

Franchise vs. Non-Franchise - Research Paper Example Licensing is when the licensor (corporation) makes certain resources available to the licensee, which is a company from another country. This enables the licensee to produce and sell a product which is similar to the one being sold by the parent company (Licensor). Franchising is a special form of licensing which occurs when a corporation sells a complete package to the franchisee which includes trademark, equipment, ingredients of the product and even advice related to managerial aspects. The franchisee takes the corporation`s name and standardized operating system (Management, Print). Some great examples of franchises include the fast food chains like McDonald`s, Subway, Burger King etc. on the other hand, a non-franchise business is one in which, although you have lesser support as compared to a franchise, you are free to make your own decisions and follow your own ideas. Unlike a franchise, owners of a non-franchise business do not have to face strict operational rules and other operational guidelines set by the franchisor (Non-franchised business opportunities, Web). One of the well-known franchises of the world is Subway which has been chosen as a franchise business for this assignment. The franchise concept of Subway involves a simple operation as the subs (sandwiches) do not have to be cooked. It also involves low investment and overheads for the franchisee. In order to start a franchise of subway, the franchisee first has to submit a complete application. It takes between 2 to 12 months to start the business at the proposed location. The franchisee is required not to have any association with other businesses during this term of franchise agreement with Subway. In order to purchase a franchise in the United States, the person should be a legal citizen or permanent resident of the United States. The franchisee is helped by the registered development agents of Subway who would help in the initial settlement period. The total investment by the franchisee can range from $115,700 to $260,350 for traditional locations and $85,200 to $202,150 for non-traditional locations. Subway helps the franchisee by providing training for two week which includes in class as well as training in stores. Unless this training is taken, the franchisee will not be allowed to open the shop or outlet. There is a certain criteria set by subway for location, store placement, store design etc. the basic menu of Subway offers breakfast, salads, flat breads and hot as well as cold submarine sandwiches. The franchisees have the option of adding four sandwiches to their menus, one to be selected by the store and two selected by the market. The franchisee has the ability to determine the pricing of store items although prices are also recommended by the company. The franchisee also has to follow a number of guidelines of ingredients and other items. The menu also includes freshly baked cookies and there also a number of requirements of salty snacks, bread etc. The company requires the franchisee to open the store for a minimum of 98 hours. The policy can be changed or eliminated at the franchisor`s discretion. The developing agent would give training of 70 hours during the first week of the store and will evaluate the store on a monthly basis. The company also provides daily back-up support by assigning a coordinator whom the store owner can call for