Franchise

McDonald’s started its franchise in India in 1995. McDonald’s signed a 25-year joint venture agreement with two partners named Amit Jatia and Vikram Bakshi. Vikram Bakshi has been the corporate face of McDonald’s in India last 18 years. Amit Jatia, vicechairman of Westlife Development Company that now controls Hardcastle, . Bakshi was given north and east, Jatia west and south part of india.

Both of them work completely in opposite direction. If Bakshi is all outrage, Jatia is all poise. If Bakshi speaks of McDonald’s with acrimony, Jatia speaks of amiability. If Bakshi accuses Jatia of instigating McDonald’s, Jatia politely declines comment. If Bakshi is counting the wealth he could lose because of the hostilities with McDonald’s,

McDonald does not like to operate their business by themselves. Its preferred mode risk and hassle free by given license to local partner by charging fee for its royalty. By this process McDonald’s makes more money. Now It has 34,000 outlets in 118 countries among them 80% are franchise.It entered developing countries like India in 1995, with two 50:50 joint ventures.It was not a hot market at the beginning. Both the partner had an experience in real estate. But they don’t have knowledge of business like strong Brand McDonald’s. With both, McDonald’s signed a 25-year joint venture agreement, which would run till 2020. After 15 years they found that there was no difference between the Bakshi and Jatia . In May 2010 McDonald’s decided to sell off its shares in the Jatia venture in favour of its Indian partner. But Bakshi was the exact opposite. On September 3 Bakshi has accused to McDonald’s of discriminatory and oppressive behavior to “fiscally disable us by hook or by crook, eventually forcibly causing us to sell out” and that it has “entered into a conspiracy” with Jatia. McDonald’s sold its 50% stake back to Jatia on May 2010 and JV moved to the American company’s preferred mode of franchise fee and royalty. On the Other hand McDonald offered Bokshi to buy him out for $5 million in August 2008 and $7 million in November 2008. To develop the franchise in India McDonald’s has decided to help Jatia that were not offerd by McDonals before .McDonald’s, funded more than Jatia and also help for Bank Loan. An Example given that in the Bakshi JV, of the Rs 206 crore capitals only Rs 15 crore came from Bakshi. Likewise, in

the Jatia venture, till May 2010, only Rs 16 crore of its total capital of Rs 124 crore came from Jatia. Now In India the growth potential is huge and also the contribution of Indian market to McDonald’s global revenue is minimal. It can be a strong business pathway for McDonald’s in the coming years

In my assignment I am going to research two contracting businesses and what different types of ownership there are within the companies. The two businesses that I have chosen for my investigation are Shell Ltd and Prestige Limousines, I will be comparing the differences between a partnership and a franchise company. I am also going to discuss what liabilities the companies have and how that particular type of ownership is suited to the business. The Shell Ltd company branch (garage) that I am investigating is a franchise company, this is based in the city centre near five ways roundabout on bath row road and which is a worldwide company.

It is a retail business, which provides the service of fuel and shop products. It provides customers with three different types of fuel which are, diesel, unleaded and optimax. These are different types of fuels service provided by Shell. Also Shell provides products and other motor vehicles services such as quality engine oils, screen-wash which is used to clean the front windscreen glass on the vehicle and etc. Shell has up to approximately 1,000 branches through-out the UK and 40,000 branches worldwide.

A franchise company is owned by shareholders and run by directors. A franchise company is different from a sole trader and partnership in that it has legal identity separate from its owners. The shareholders are not liable for the company debts, they regulated by the Acts 1985 and 1987. Businesses such as Shell are run by a franchisee who has been given permission to operate the business by a franchisor, the organisation which owns and controls the product and services being sold. The franchisee gets the benefit of the franchisor’s expertise in marketing and operations.

The franchisor at Shell will often supply fuel and stock for sale, provide shop displays and give help and advice to the franchisee, which operates in a particular branch of Shell. The franchisee has the responsibilities of running the business on a day to day basis and keeps the stock sales profit and commission on fuel from the directors of the franchise company. In addition, the franchisee also needs to pay the franchisor certain amount of profit for the use of the trade name. Some franchises carry more risk then others, meaning that some franchises are less likely to be successful.

Businesses such as Shell have a successful and famous name for their standards and therefore companies such as Shell carry fewer risks. Being a franchise company suits Shell because it is a well known and successful petrol station and because it takes one person to run minimum six petrol stations sites that is what is required from Shell and this will eventually get fewer people to run a couple of sites and will allow Shell to increase its branches. Each particular site is being run successfully then it will allow Shell reputation and value of the company increase. The other chosen business is Prestige Limousines.

The type of business ownership is a partnership. This is based in Sparkhill, Birmingham and is run by the family as a family business. This business has two partners. This business involves hiring out limousines and other luxury cars. Once a customer has booked out a limousine or any cars for a particular occasion and has agreed on a fixed package then on the date it is booked for it is driven by the limousines driver and is located where it is supposed to be. The benefits of having a partnership is if there is one owner he has too much pressure to run the business.

Since it has two partners there is less pressure on one person and this way two people can share all their ideas. If one is off sick, the other could cover it. If the business becomes bust the partners have unlimited liability for any debts, and are therefore personally liable. The liability Prestige Limousines may face is changes with a partnership ownership which will affect rights and liabilities and the amount of capital may change and so might the share of profit. Changes in a partnership may happen when a partner retires or dies, or if a new partner joins.

Also another way that a partnership business could be affected by when a partner decides to retire. For Prestige Limousines this could have a big affect because it is only a two people partnership, and if one was to retire it will lead to many problems such as it would either become a sole trader ownership or it will take time for the remaining partner to find another partner for the business. Also the same problems may occur if one partner dies. One other affect on business could be one of the partners become bankrupt. P2-M1

There are several different types of business ownership, the owners have different responsibilities and involvement in a business. One aspect of this is who bears the business risk and whether the owners have limited liability. Different types of ownership are, Sole trader Partnership Company Public ownership Co-operative Franchise. Normally when a business starts such as Prestige Limousines , the business is small. This is because the person who starts it hasn’t got a lot of finance.

A person who starts alone in the business world is called a sole trader. If there are two or more persons involved , e. g. family or friends, then it is called a partnership. These two types of businesses are unlimited liability, because it’s not the business that is liable but the owner. This means that, if the business goes bankrupt, the owner’s personal assets can be taken away. For this reason being and from consideration I see that if one partner at Prestige Limousines becomes bankrupt the second partner is there to help if it was a sole trader his personal belonging (valuables) could be taken away therefore I think a partnership business in Prestige Limousines is best suited for it purpose.

Shell is also suited in its ownership, if it was to be any other type of ownership then it would not be successful, because it has more then 40,000 branches worldwide it would be very difficult for it not to be a franchise company because the company name then wouldn’t be recognisable for consumers if there was to keep a different company name for each branch.

Shell has one supplier which supplies them their good and services therefore they would have any problems of finding a particular supplier. The tertiary sector, whose services are sold in consumer, capital, industrial and service markets, forms a major part of most developed economies (such as the UK Italy and France). In recent decades the tertiary sector has increased in importance for many developed economies.

In the UK the tertiary sector is by far the biggest proportion of the economy. Operating in the tertiary sector poses similar problems to that of the secondary sector, they still need to “add value” to their products and they still face competition. Yet because a good deal of service sector business requires “face to face” contact with the customer, it is a little harder for overseas competition to take customers away.

In , author and franchise consultant Mark Siebert delivers the ultimate how-to guide to employing one of the greatest growth strategies ever — franchising. Siebert shares decades of experience, insights, and practical advice to help grow your business exponentially through franchising while avoiding the pitfalls. In this edited excerpt, Siebert explains the benefits to you of Discovery Days.

Whichever franchisor came up with the concept of Discovery Day is an unsung hero in the history of franchise sales. Prospects who might otherwise be scared off by the thought of flying out to meet a high-powered franchise salesperson were put at ease by an event that would help them learn more about the franchisor while the franchisor learned more about them. Many were attracted to the name, which had a wonderfully nonthreatening ring to it.

And soon, franchisors worldwide sold it in just that way. “Bring your spouse, but leave your checkbook at home” was the mantra. But make no mistake: Getting someone to Discovery Day is still a sale — and perhaps the most difficult one short of the actual close. You’re asking your candidate to take a day or more out of their busy schedule, spend time and money to travel to your location, and ideally persuade their spouse to come along.

The purpose of Discovery Day is fourfold. First, the candidate can learn more about you and your franchise. Second, you can further qualify the franchise prospect, both in terms of commitment (by coming to see you) and in terms of getting to know them better. Third, you can get feedback from your management team on the candidate. And finally, you can put your best foot forward and make a good impression on the prospect.

Remember, from a sales perspective, the candidate is (or should be) looking at more than just the franchise concept. Part of what they’re buying is you and your team.

The key is building value around the Discovery Day event itself. If the candidate believes Discovery Day is simply a tool to evaluate them, they’ll delay deciding whether to attend until they’re ready to say yes. If, on the other hand, they believes Discovery Day will help them make an informed decision, they’re much more likely to attend earlier in the sales process — allowing you to put your best foot forward sooner rather than later.

This leads us to a problem I call the “founder’s trap.” Often, a franchise’s founders (or even some salespeople) want to be helpful and answer every question a prospective franchisee has as fully as possible. But the trap in this approach is that it eliminates the need to come in for Discovery Day.

The better alternative is to answer some of the candidate’s questions by pointing out the value they’ll get out of Discovery Day, rather than providing a comprehensive answer. You want to sell the strengths of your team and the value of the meeting, so while you might give them a partial answer, be sure they know they’ll get a much more detailed understanding when they come in to meet your team and see the concept firsthand.

This sometimes means checking your ego at the door. After all, you are the genius founder of the franchise — of course you can answer every question candidates might have over the phone. But even if you can answer a question, that doesn’t necessarily mean you should. Sometimes it’s better to wait and address it in person at the Discovery Day, when you can really sell them on the concept.

It’s important to have a well-choreographed process in place for your Discovery Days. While there’s no definitive agenda for these meetings, these events will often involve:

• A casual dinner the night before where you can get to know the prospect on an informal basis
• A tour of one or more operating units (if you have physical locations)
• A tour of your home office with introductions to various members of your team
• Interviews with team members, during which each side will have the opportunity to ask and answer questions
• A PowerPoint presentation outlining the concept, market, support provided, and other aspects of the franchise

A Discovery Day shouldn’t simply be a rehash of information you’ve already shared with the candidate via email, over the phone, or through webinars. If they’re making the investment to travel to your office, they should receive additional value that will help them in their decision-making process and overall understanding of the franchise opportunity. This again emphasizes the importance of carefully placing Discovery Day within the overall context of your entire franchise sales process.

At the end of the Discovery Day, you should let the candidate know how the management team felt about the meetings and, of course, ask for an advance. At this point, you should be looking to close, so assuming you’re still impressed with the candidate, your parting conversation might sound like this:

“I haven’t had a chance to speak to everyone on the team yet, but I think they were all impressed with you. If the team decides to award you a franchise, are you ready to move forward?”

If, on the other hand, you don’t want to move forward with the candidate, you’ll want to let them down gently. Make sure they know you’re not accepting them into the franchise system for their own good—not simply because you dislike them. But do not go into specific reasons for the rejection. Simply tell them something like:

“As much as we like you as a person, our number-one concern here is always that our franchisees succeed. And while you certainly could bring some tremendous skills to the table, the team wasn’t sure that your skill set was a good match for our business model.”

While a rejection is always painful for all involved, remember that it’s generally in everyone’s best interest.

There are some brands that franchisees would kill to get their hands on: Starbucks, Chipotle, Shake Shack and, most coveted of all, In-N-Out Burger, the California-based chain that has a cult following so loyal it should be investigated by the ATF. While none of these brands will likely be franchising soon, Scott Walker has done the next best thing: The cofounder and CEO of Screenmobile, which sells and repairs door and window screens, has been pitching his low-cost business to managers from In-N-Out Burger. Several former burger sellers are now franchisees in his 90-unit system. The reasoning: Walker believes that anyone who has proved themselves in that fast-paced, well-run restaurant probably has the drive and energy to make a mobile franchise work.

Walker isn’t straight-up poaching In-N-Out employees. The pipeline has been word of mouth. “After one joined, others quickly followed,” Walker says. “A few of his friends would see how successful he was becoming, but more important, that he felt fulfilled in his career, enjoyed running his business and was simply having fun.”

We talked to two of those recruits: Jason Frazier, former In-N-Out manager, and Brandon Wlasichuk, who worked in maintenance at the restaurant for nine years. Both joined Screenmobile as franchisees within the past two years in Bakersfield and Visalia, Calif. 

How did In-N-Out prepare you for owning your business?

Frazier: I got the courage one day to finally ask my boss what it would take for me to become a store manager. His answer was to make quality a big deal and be a role model to lower-level associates. Once I became a manager and began training others, I started seeing a lot of the business side of it and really why In-N-Out is so successful. 

Essentially, it’s because they have a great product that’s prepared consistently throughout the stores. And they treat their associates right and train them well. In return, they get happy customers. In-N-Out taught me how to work hard, keep track of inventory, reduce product waste, the importance of customer service and to strive to be my best every single day.

What weren’t you prepared for?

Wlasichuk: Pretty much the whole screening world was new to me when I started, so building doors and window screens took a good chunk of time. Screenmobile University is an extensive two-week training course that teaches all new franchisees everything they need to know about running a business, as well as how to install, manufacture and repair screens. This was extremely helpful.

Frazier: When I first got involved with owning and operating a business, the main skill I needed to improve was communication. Sometimes I’d have to remind myself to slow down in conversation and really listen. Other times I’d have to make sure there was absolutely no confusion in a message before I sent it to the shift team. This is a skill I continue to work on improving every day. 

Immigrants have long sought America’s bounties. The Pilgrims came for religious freedom. Countless others came for work. And John and Alison Abercrombie came for the abundance of hydraulic hoses. In fact, they sold their home, packed up their two children and moved from Wollongong, Australia, to Houston because of those hoses.

It’s a story that begins at the Abercrombie family hydraulics-services company in southern Australia. John’s father sold the business, and then John and Alison continued to work there while looking for a shot at controlling their own destiny. John was attracted to , an Aussie-based mobile franchise that fixes hydraulic hoses on equipment like excavators at work or construction sites, but it turned out that the brand was already well-established throughout Oz. And yet! The company was eager to expand into the U.S., and John was game to help, so off the family went.

Last January he opened a Pirtek unit in Houston.

Is Pirtek that good of an opportunity that you’d move halfway around the world?

We knew we wanted to own a business. That was clear. We wondered what we could do in Australia, and it came down to running a chicken-wings shop or something like that. But from my [former] career, I was very comfortable with Pirtek and saw the potential it has in the U.S. And to be honest, having an adventure and resetting our life was appealing. We compared it to wiping a whiteboard clean and designing things anew.

Was it difficult to get a visa to move to the United States?

It’s a terrifying process. From start to finish it was five or six months, and it all depended on walking up to a counter at the U.S. consulate and praying that the gentleman behind it accepted our application. If he didn’t, we had no plan B; we had already quit our jobs [at the hydraulics-services business] and sold the house. It was extremely stressful.

Why Houston? How’s it going?

We looked at Charlotte and Las Vegas. But our family felt most comfortable in Houston. It’s just a massive opportunity; there are an incredible number of hydraulic hose users. So far, we feel we’re fitting in well. We came from a city of 300,000. Houston has seven million. It was quite a shock to see the freeways and get used to traffic.

What’s been the biggest difference?

It’s the small things that drive you nuts — like paper checks. In Australia, I hadn’t used a check in 15 years. Here they are standard, and people still use fax machines quite a bit. But the biggest difference is employee skills. Australia has a very strong technical training system where technicians would have done three to four years of college and had an apprenticeship. Not so here. We really have to watch to spot people who are technically competent versus people just saying they are to get a job.