Franchisors Do Not Like to Take on 'Entrepreneurs' as Franchisees - Essay Example

Franchisors do not like to take on Entrepreneurs as franchisees Table of Contents Introduction 3 Discussion 3 For the ment 3 Against the ment 5 Conclusion 6 References 8 Introduction Global business environment is becoming highly volatile due to constant change in global economic and political environment. It is true that the franchisors are becoming more selective in the adoption of franchisees due to volatile global economic and political environment. Franchisors generally scrutinize each and every aspect before providing franchise as the growth rate of global economy is slowing down. The franchisors around the globe generally do not take the entrepreneurs as franchisees. This essay will discuss this statement by providing several facts and aspects for and against the statement. Several arguments, examples, knowledge and critical analysis have been included in this essay to prove the provided statement. Discussion This part of the essay will try to provide facts and examples both for and against the statement. For the Statement Both franchisors and franchisees get benefits from each from this franchising business. It is quite difficult for a multinational organization to enter into a new global market and starts to make profit from the initial point of time. First, they make the local people aware about their presence in that market. Therefore, the multinational organizations used to find franchisees that can start a new franchisee business with the help of familiarity of the brand name of the franchisor in global market places. In addition to this, knowledge about local market trend and demand helps the franchisee owners to develop a potential client base. Despite all of these things, it can be stated that the franchisees cannot be termed as individual entrepreneurs. There are several reasons and examples to prove this statement. Women who are into their own business, most of them are seen as franchisee rather than entrepreneurship. According to current business environment urban women are more preferable with franchising whereas rural women can be seen as value added enterprising. Joining franchisee by women has been increasing day by day which does not indicates that they are with less potential to come up with any value added business by their own. It is just because women are less likely to be trying for doing everything from start-up by their own as an entrepreneurship. Therefore, they like to run an established or running business which a franchisor can provide for those women who are not from business family. Therefore, today’s women entrepreneurship stands mainly on franchisee business where there is zero value addition by themselves as any entrepreneur. Hence, the statement is very true in this case (Webber, 2013, p.71-76). The franchisees do not involve in brand development and marketing and promotion of products in different market (Kaufmann and Dant, 1999, p.7). They always investigate the efficiency and appropriateness of the selected franchisee place or store layouts. The franchisors always provide some percentage of initial investment required for starting a franchise to the franchisee owners in order to set up the new business. For an example, McDonalds is known as one of the leading fast food retail chains in this world. The organization follows strong and effective franchisee business model in order to achieve business success in global market places. Moreover, the franchisees of McDonalds have to follow the developed strategies and decisions by the franchisors (Piercecollege, 2004, p.21). It is highly essential for an organization or an entrepreneur to develop potential business strategies in a particular market place as it helps to ensure significant competitive advantages for the organizations. The organization always selects and develops supply chain and distribution base for the franchisees. A business man or an individual cannot be called an entrepreneur until and unless if that individual does not develop a business strategy or make decisions for his or her organization to gain potential competitive advantages (Ketchen and Short 2011, p.13). These entrepreneurs do not have the rights to develop corporate values and business goals for the franchisors. Therefore, it can be positively stated that the global franchisors do not like to take on the entrepreneurs as the franchisees due to lack of entrepreneur’s characteristics in the franchisee owners. The franchisee owners do not take part in the strategy development or decision making process. Therefore, it can be stated that the franchisee owners do not have the characteristics of the entrepreneurs (Norton, 1988, p.18). Against the Statement It is highly important for a franchisor to provide franchisee to the individuals or the franchisee owners based on the economic environment, political factors and social factors of the country. It is true that the franchisors generally take the entire control on the business operation processes of the franchisees. But, it is true that the franchisee owners have to ensure several critical success factors in different global market places in order to enhance significant business performances. KFC is also considered as one of the leading fast food retail chains in this world. The organization always follows franchisee business operation model in global market place in order to achieve potential competitive advantages (Spiegel, 2000, p.76). It is true that the business performance of each and every franchisee generally depends upon the ability of the entrepreneurs. Selection of several business resources in low cost is the major responsibility of the franchisee owners as the franchisor used to continue their relationship with the franchisee owners for a longer a period of time based on the business performance of each and every franchisee outlets (Webber, 2013, p.76-81). For example, the management of KFC used to provide food items by integrating different flavours according to the food culture of the people in different countries. Food items generally differ from a country to another country based on the social tradition and cultural background of people. However, the management of the organization used to adopt this strategy based on the valuable suggestions of the franchisee owners. The organization provides different food items based on the different culture of the country (Combs and Ketchen, 2003 p.10). It is the responsibility of the franchisee owners to increase the sales of the outlet. The franchisors used to renew the franchising agreement with the franchisee owners based on the performance of the franchisee outlets (Moore, Palich and Pretty, 2006, p.23). The franchisors do not help the franchisee owners in the employee recruitment and selection process. Sourcing of human resources and maintain the business layout are the other responsibilities of the franchisee owners. It is quite difficult for the franchisee owners to practice different organizational culture model and make the newly recruited employees oriented with the organizational culture (Urban, 2010, p.133). It is the total responsibility and expertise of the franchisee owners to guide the employees towards the developed business objectives and corporate goals. However, these activities can be considered as the characteristics of an entrepreneur (Forbes, 2013, p.1). In addition to this, it can be stated that the business performance of several organizations that used to follow franchisee business model cannot get business success without having a valuable support from the franchisee owners in different global market places (Blanchard, 2011, p.489). It is the effective leadership style, managerial skills and motivational power of the franchisee owners that helps the employees to get influenced or encourages performing better work. It is acceptable that the work culture of an organization used to vary from a country to another country. But, the effective guidance and support of the franchisee owners help the employees to ensure workplace performances according to the local market demand and consumer behaviour (Tan, 2001, p.95). Conclusion It is clear from above discussions and examples that it can be accepted that the franchisors do not like to take on the entrepreneurs as the franchisees. First of all, the franchisors always try to control the entire business operation activities of the developed franchisees around the global market places. The franchisees have to follow the developed organizational culture, corporate value, strategies and decisions that are developed by the franchisors. The franchisors do not consider franchisees as the entrepreneurs due to these reasons. On the other hand, it can be stated that franchisee owners have the characteristics and skills of an entrepreneur as these franchisee owners have to make sure effective recruitment process, product offering strategy and effective customer relationship management process. Therefore, it can be stated that the franchisors need to take on entrepreneurs as the franchisees. References Blanchard, R., 2011. Creating Wealth with a small Business. New York: iUniverse. Combs, J., and Ketchen, D., 2003. Why do firms use franchising as an entrepreneurial strategy? Journal of management, 12(1), p.10. Forbes., 2013. Franchisees are Entrepreneurs (Let the Debate begin). [Online]. Available at: . [Accessed on January 13, 2014]. Kaufmann, P., and dant, R., 1999. Franchising and the Domain of Entrepreneurship Research. Journal of Business Venturing, 19(1), p.7. Ketchen, D., and Short, J., 2011. Is Franchising Entrepreneurship? Entreprenuership Theory, 32(2), p.13. Moore, C., Palich, L., and Petty, W., 2006. Small Business management. Stamford: Cengage Learning. Norton, S., 1989. Franchising, brand name capital, and the entrepreneurial capacity problem. Strategic management of Journal, 24(1), p.18. Piercecollege., 2004. Entrepreneurship, Small Business, and Franchising. [PDF]. Available at: . [Accessed on January 13, 2014]. Spiegal, R., 2000. The Shoestring Entrepreneurs guide to the best home based Franchisees. London: St. Martin’s Press. Tan, C., 2001. Financing for Entrepreneurs and Businesses. New York: NUS Press. Urban, B., 2010. Frontiers in Entrepreneurship. New York: Springer. Webber, R., 2013. An Introduction to Franchising. London: Palgrave Macmillan. Read More