Analysis Of Hooters Of America - Essay Example

Topic: Hooters of America Section I – Company and Industry Company’s The company Hooters of America is a Franchisor and is a Georgian Corporation (Hooters of America, Franchise Disclosure Document, 2010). The business functions under the title of “Hooters”. The company’s roots can be found in J.J. Wingers, Inc., which was located in Texas and has an origin in 16th April 1984. The company’s name changed from “J.J. Wingers, Inc.” to “Neighborhood Restaurants of America, Inc.” on 17th July 1984. Later on, on 3rd March 1987, the company had a unification with a Georgian corporation having the same name, “Neighborhood Restaurants of America, Inc.” The company took the name, “Hooters of America” on 7th April 1989. (Hooters of America, Franchise Disclosure Document, 2010). Therefore, their beginning can be traced back to 1984 with a different name while their functionality under the name of “Hooters of America” can be traced back to 1989. “Hooters of America” is mainly concerned with the business of running Hooters Restaurants. However, it has many affiliates, which run different kinds of businesses under the title of “Hooters” such as Naturally Fresh, Inc., Super Sports Merchandisers, Inc., Super Sports Marketing, Inc., Hooters National Advertising Fund, Inc., Hooters Magazine, Inc., Hooters Racing, Inc., Hooters Sports News, Inc., Hooters Sports Productions, Inc. and National Golf Association, Inc. (Hooters of America, Franchise Disclosure Document, 2010). There are varieties of eatables served at Hooters Restaurants and there are certain unique characteristics that make Hooters Restaurants different from other dining spots. “Hooters of America” offers franchises for the institutionalization of its restaurants and its services under the name of “Hooters of America” (Hooters of America, Franchise Disclosure Document, 2010). It is a public traded company. As far as the expanded business of the company is concerned, “Hooters of America” is a large networked corporation with many affiliates. Their head office is in Georgia. All the affiliates of the company are also located in Georgia (Hooters of America, Franchise Disclosure Document, 2010). The company has license to operate in the whole United States of America and also outside the States. The company provides franchises for restaurants (Hooters of America, Franchise Disclosure Document, 2010). The franchises of “Hooters of America” are spread in the whole United States due to which, it can be easily stated that the business network of the company is widely expanded. Industry in which the Company Operates The company, “Hooters of America” operates in restaurant business and provides franchises for running its restaurant business under the name of “Hooters of America”. The restaurant businesses are usually very competitive in nature as many people show interest in this business because of its extended profits and advantages. “Hooters of America” also have many competitors who participate in struggles to be better in the restaurant business. With increasing income, the competition becomes more and more complicated and tough as many well-established companies come in the race. The restaurants offering similar services to “Hooters of America” are the competitors of the company. Other restaurants offering different services are also in competition because of the variety they offer (Hooters of America, Franchise Disclosure Document, 2010). The companies who are in the business of running restaurants and offering franchises for restaurants are the major competitors of the company. Section II – Franchising Information  Fees In Company’s Franchise system “Hooters of America” provides franchises to people interested in running their restaurant business under the title of “Hooters of America”. For franchising purpose, the company asks for a respective fee related to franchising process. There is an initial fee that is required to be submitted when a franchise agreement is signed with the company. The initial fee should be paid all in one and no chunks of fees can be made. The initial fees is seventy-five thousand US dollars, which is necessary to be paid before starting the franchising procedure (Hooters of America, Franchise Disclosure Document, 2010). Along with the initial fee, the company asks for an option fee if the franchiser is interested in availing an option that is given in “Option Addendum”. After giving the initial fee, the giver enters into “Option Addendum”. With this option, the registered user can open new restaurants under the name of “Hooters of America”. However, only those locations or territories can be used, which are given in the “Option Addendum” (Hooters of America, Franchise Disclosure Document, 2010). For each new location, the registered user has to pay an option fee that is fifteen thousand US dollars. For every availed option, the initial fee that is seventy five thousand US dollars needs to be paid additionally to the first paid fees. This fee is called “Option Franchise fee”. All the fees are required to be paid as lump sum (Hooters of America, Franchise Disclosure Document, 2010). The company allocates a certain time period for opening a restaurant when the above-mentioned fees are submitted. Usually six months are given to the registered user to open the restaurant, after which, extensions are there. First extension is of thirty days, which means one month. For the first extension, no fee is taken. However, for the second extension, that is, another month’s time, an extension fee is charged that is twenty five hundred US dollars while for the third extension, the registered user has to pay an additional five thousand US dollars (Hooters of America, Franchise Disclosure Document, 2010). In addition, “Hooters of America” restricts the users of the franchise to purchase first stock of eatables, drinks and other products from the affiliates of the company. The purchase can range from twenty five thousand US dollars to fifty thousand US dollars in relation to the franchise and restaurant’s magnitude. Along with all the mentioned fees, royalties, advertising, promotion, media, insurance, training, travelling, damages and auditing fees can be applied on the franchise agreement’s signatories (Hooters of America, Franchise Disclosure Document, 2010). Total Investment In Company’s Franchise System The total investment that is required for running the company’s franchise system is $ 845, 500 to $ 2, 465, 000 (Hooters of America, Franchise Disclosure Document, 2010). All the costs that are to be paid for the investment including all kinds of fees are included in this cost. Total investment includes option addendum, option fees, initial franchise fees, franchise option fees, insurance, training and many other kinds of such fees (Hooters of America, Franchise Disclosure Document, 2010). Franchising Description According to the “Franchise Disclosure Document”, the company, “Hooters of America” comes under many litigation complaints such as sexual harassment issues and discrimination issues. The work environment of the restaurants working under the name of “Hooters of America” was also blamed of bigotry and sexual persecution. The company responds in negation about all these issues and speaks of it as an attempt towards negative reputation building by competitors. It is generally felt by the administration of the company that all such attempts are fruitless to injure the financial business of the company (Hooters of America, Franchise Disclosure Document, 2010). A transfer fee is charged when after agreeing on having a franchise, a transfer is required. If the transfer is because of any death or accidental mishap, the registered user is not required to pay any transfer fee. Therefore, it cannot be said that the transfer rights are very strict. Operating rights can also be allocated to any company and no transfer fee is required (Hooters of America, Franchise Disclosure Document, 2010). For ownership transfer, a transfer fee is required but the transfer rights are quite flexible. For any kind of transfer, an approval by the company, “Hooters of America” is required, without which, transfer is not possible (Hooters of America, Franchise Disclosure Document, 2010). The franchising procedure with “Hooters of America” is not very difficult as the company is quite supportive in enabling the registered user in establishing his business under the title of “Hooters of America”. There are certain policies and rules that are required to be followed along with essential fees that should be paid to avail the rights of using the trademark of “Hooters of America” (Hooters of America, Franchise Disclosure Document, 2010). The company’s policies are not that much strict or unsupportive. Section III – Popular Press Information from Popular Press According to Business Week and Financial Times, “Hooters of America” enjoy a good reputation and there are fair chances of expansion and success of this company along with its affiliates. However, there are certain cases and court issues against the company, which can be tackled with enough effort. The company has gone through many phases of development as it has gained its current name and status by getting on some position systematically. The efforts of company’s administration and its personnel cannot be negated. Starting from 1984 till now, the company’s progress shows the passion and struggle of the people associated with the company (Hooters of America, Franchise Disclosure Document, 2010). Works Cited Hooters of America, Franchise Disclosure Document. June 10, 2010. Read More