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Franchised Business and Non-Franchised Business

Franchised Business and Non-Franchised Business

Introduction

A franchise is a business licensed by a big or international company, which acts as its dealer. In this sense, the business sells products or services on behalf of the company. A franchisee operates as the sales agent of the major organisation. On the other hand, a non-franchised business is the one that operates on its own by selling varied products and services. McDonalds Hamburgers is a franchised business with the major being McDonalds, which has many franchisees in the entire world. A company, such as Sams Bar and Grill, is a non-franchised entity operating as an independent business selling drinks and food products. In this context, the study explores business operations of a McDonalds Hamburgers business and Sams Bar and Grill as both franchised and non-franchised organisations respectively.

Franchised Business: McDonalds Hamburgers

1. Exactly what is this particular franchise/business?

The McDonald Hamburgers business highlighted in this study is a franchise the operator or owner acquired from the McDonalds Corporation. The operator acts as the agent of McDonald by selling its food, majorly the Hamburgers, to its customers. Apart from the special hamburger products, the restaurant also offers other goods, such as drinks and grilled chicken. The restaurant makes hamburgers using natural ingredients of different kinds in order to cater for the needs of its customers. In addition, McDonalds Hamburgers has included in the menus detailed information about their ingredients, which is in compliance with the McDonalds values as well as the need to address customer allergies and personal needs. The restaurant operates on a busy street with locals and visitors who prefer fast food and drinks.

2. Did you know anything about this type of business/particular industry before you went into it (do you have a background in fast food business?

According to the business owner, he had the knowledge about McDonalds Hamburgers before he became one of their franchisees. The man stated that he learned how to prepare hamburgers during his college years. On the other hand, he worked in a family restaurant, where he started to sell fast food products and drinks at the age of eighteen. Apart from his profound knowledge in restaurant operation, the franchisee was enthusiastic about fast-food business. He had a strong aspiration of introducing differences in the fast food industry by providing quality products and services to the customers.

3. Was it easy, or very difficult, to get funding to get started?

Due to the fact that he did not have enough capital to establish his own brand, the franchisee decided to use an already established brand that attracts many customers. As a result, he started operating a franchised business under McDonalds Corporation. Since the operator knew about the business and the fast-food industry, it was easier for him to gain enough capital and acquire one of the McDonalds Hamburger restaurants situated in his locality. With the vast knowledge and experience in fast-food sector, the franchisee was able to establish the business within a short period.

When people asked him how he gained the capital, the business operator required some time to take a long breath of relief before explaining the difficulties he faced to succeed. After graduating with a diploma in Hotel and Hospitality Management, he had no resources to start the business. He did not want to go back to the family business, which was facing difficulties due to poor management. Despite the fact that the man has never appreciated the idea of employment, he had to secure an employment opportunity at Five Star Hotel as a branch manager in order to acquire capital. Coupled with financial challenges at the family level, it was difficult to raise enough capital within a period of two years. However, he succeeded and approached McDonalds to acquire the hamburger restaurant.

4. Did you get a lot of support from the Franchise? Did they help you find a location?

According to the franchisee, McDonalds Corporation played a pivotal role in helping him start the business. As the franchiser, the company gave him recommendations related to several issues regarding their policies and values aimed at providing high-quality products and services to the customers. The main support the client requested was the business ideas, such as menus, detailed food information to the customers, and brand establishment to supersede the competitors.

The company also helped him in establishing the restaurant to attract potential customer. Apart from hamburgers, they also advised him to include other food products, such as grilled chicken, meat, sausages, and drinks, etc. Concerning provision of a comprehensive menu, the franchisee learned that this would help allergic customers to make right choices. The man was not aware of that tip, although he had knowledge and experience in fast-food products and sales.

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5. Did the Franchisor specify everything, or did they allow you do things on your own?

Regarding the issue of product specification, McDonalds Corporation, as the main franchisor, specified products and services to be offered in the business. Moreover, they were specified based on the McDonalds brand, values, vision, and mission. However, regarding arrangement the franchisee had the freedom to set the business based on the related experience. However, he first approached the franchisor to help in making the best arrangements regarding products display, operations and customer services, etc. The franchisee recommended to ask for support from McDonalds Company. He emphasized that apart from attracting more customers, the major objective of the business was to promote McDonalds brand name and customer loyalty.

6. What was (were) your biggest problem(s) during the early year(s)?

The franchisee stated that one of the biggest problems he faced during the first years was increased customer demand. As a new business, the operator did not have enough financial resources catering for the daily increasing demands of the customers. The clients, especially those who required customised services due to their health conditions and personal challenges, could not obtain what they requested. The increased demand and special orders meant that it was necessary for the business to expand its operations in order to accommodate all the customers. Another challenge that the franchisee faced was the scarcity of some raw materials, especially the natural ones, such as vegetables, fruits, and animal products. He stated that this challenge resulted from the fact that he failed to contact the reliable suppliers.

On the other hand, the available suppliers took the advantage of scarcity to exploit him. Finally, he would have earned small profit that could not have sustained the additional needs of the business and possible growth.

7. What about employees? Have you experienced a lot of turnover? Have you found some good management employees? Where did you find them?

Another challenge that the franchisee faced related to the human resources, especially chefs who could prepare high standard hamburgers and other products. Those, whom he could contact were employed and received high salaries that seemed unsustainable to the new business. The only option for the man to restore the business to the growing path was to acquire capital from other sources, which was also a serious challenge.

After acquiring more capital from a bank through the support of the franchisor, the franchisee expanded the production. Since the customers demands were not satisfied, the business picked up and the operator was now making enough sales. However, stock turnover was extremely high due to the readily available customers that flocked the restaurant from morning to evening. He employed more people with profound knowledge and experience in franchised business, especially in the fast-food sector. The employees executed their tasks in various sections, and this enhanced the smooth operation of his McDonalds Hamburgers restaurant.

8. Who gave you the best advice when you were starting up? What was that piece of advice that you value the most?

Concerning the franchisee, nobody gave him advice. Moreover, he had the idea of starting the franchised business from the beginning. However, his father who had managed the family restaurant for several years encouraged him to pursue the dream.

9. Who do you feel are your biggest competitors? What do you do to compete with them?

He considers that his key competitors are non-franchised restaurants that offered hamburgers and other fast food as well as drinks. Many of them offer their products and services at considerably lower prices. On the other hand, some of the restaurants offer other recreational services that attract more customers. Brand loyalty and effective services as well as the establishment of hospitality services have helped in dealing with the competitors.

10. Do you have a business plan? Have you ever revised it?

The franchisor has a business plan that he revises every year depending on the changing needs of the customers, business platform with regard to technology. Currently, he has enough financial security to explore the market and expand the business.

11. Do you do your own financials, or does someone do them for you? Is there any other work you either subcontract out, or the franchisor does for you?

Although he does not outsource services, the franchisee sometimes seeks for support and services from McDonalds Company. He considers that he does not need outsourced services because he owns one restaurant.

12. Do you own more than one location/one franchise?

Currently, the franchisee has only one restaurant. The main reason he expresses is that he is intent on providing a strong foundation for capital, resources and customer base before opening another location.

13. How do you do your marketing/market research/advertising? How do you find new customers? Do you have many returning customers and if so, how do you measure them?

The franchisee used the McDonalds brand loyalty as a tool to market his products and services to the potential customers who were readily available. He then offers exceptional services to retain them. As a result, he has many returning customers.

14. Do you have a succession plan in place, for someone to take over your business someday?

Currently, the franchisee does not have any success plan because he considers that he is still young and has enough energy to develop the business.

15. Do you have any family/friends who work in your business? Why/Why not?

He does not work with friends or any family member. The owner treats his business as a unique entity and works only with people who can cause a direct and positive impact on the business.

Non-franchised Business: Sams Bar and Restaurant

1. Exactly what is this particular franchise/business?

This is a non-franchised business entity owned by three business partners, Denis, Steve, and Casey. The business started its operation in 1985. Apart from the soft and alcoholic drinks, Sams Bar and Grill produces and offers handmade food products with fresh and fine ingredients. The business offers friendly services, which is the cornerstone of its customer attraction strategy. The owners of Sams and Grill have always followed the businesss mission to ensure that the premise is a local recreational place for every customer.
The business is located in a neighbourhood as a restaurant and bar famous for its Jukebox and shuffleboard table. The business has always continued to improve its menus in order to meets the demands of customers and ensure that its products are among the favourite for the visitors. Some of its product lines included Beer Battered Chicken sandwich, Sams sauce, and Steak Wedge Deluxe. The business puts much effort to cater for the needs of all its customers in order to retain the existing clients and attract the new ones.

2. Did you know anything about this type of business/particular industry before you went into it (do you have a background in bar and restaurant business?)

The owners of Sams Bar and Grill knew about the business and the industry before engaging in it. They had interest in starting the bar and restaurant business. Therefore, the three men joined their effort in 2005 in order to establish the business and provide it with a new image. In addition, the partners have knowledge and experience in the operation of bar and restaurant business.

3. Was it easy, or very difficult, to get funding to get started?

Despite the fact that it was not an easy task to start the business, Denis, Steve and Casey did not encounter many problems while starting Sams Bar and Grill. First, the business had been in existence since 1985. Second, they had enough capital to start its operation. They needed to provide a new image to the business different from the traditional one based on the changing business environment and technological platforms among other factors.

4. How did you find your location?

The location of Sams bar and Grill had been established more than two decades ago before the current owners took over the business. Established as a neighbourhood restaurant and a pub, the company provided the same services to the people living in the neighbourhood as well as visitors. The owners of the business acquired the premise and provided its new image with high quality services that target specific needs of the customers.

5. What was (were) your biggest problem(s) during the early year(s)?

The main challenges that owners faced when establishing the new Sams Bar and Grill was the changing trends in customers demand. Other restaurants and pubs had been established in the neighbourhood with the new themes, perceptions, products and services. It was difficult to restore the traditional dominance of the business. However, the new owners changed their themes in the menus, decorations and upgraded resources to meet the current standards. With the traditional brand loyalty of Sams Bar and Grill, they could easily overcome the challenge.

6. How did you decide on the overall name, decorating scheme, and layout for your business?

Denis, Steve and Casey did not intend to establish a new name after acquiring Sams bar and Grill. They decided to retain its name and brand due to the traditional dominance and customer loyalty to the business. They considered that it would be easier to revive the traditional brand instead of starting a new one. Therefore, they needed to transform the business regarding production and services in order to provide a new look and attract old and new customers. They upgraded its major aspects, such as the bar counter, shuffleboard tables, and Jukebox as well as food and drink service deliveries. According to the owners, as long as they can offer what the client demands, they will always prepare and provide it.

7. What about employees? Have you experienced a lot of turnover? Have you found some good management employees? Where did you find them?

The owners have employed chefs in the grills, waiters and waitresses in the bar. However, they take the management positions in the business to ensure that operations meet the customers needs. Satisfaction of specific needs of the customers has been the key policy ensuring their high sales and hence turnover. The three men have profound knowledge in management of bar and restaurant. They have taken control over the business.

8. Who gave you the best advice when you were starting up? What was that piece of advice that you value the most?

Before starting the business, Denis, Steve and Casey met and discussed the possibility of having a joint business. Consequently, they decided to become the owners of Sams Bar and Grill in 2005. After sharing opinions and recommendations, the friends decided to join their resources in order to gain enough capital and employ human resource for bar and restaurant management.

9. Who do you feel are your biggest competitors? What do you do to compete with them?

Steve considers that the established bars and restaurants in the neighbourhood were their major competitors. They had started similar businesses with the new ideas and recreational resources, such as casino, which attracted more customers from Sams bar and Grill. The owners of the business put much effort to meet specific needs of the customers as long as they have ingredients to prepare food according to the clients demands. They believe that this will avert the perception of customers and improve their brand loyalty to the business.

10. Are you thinking of expanding in the future?

The owners also aspire to expand their services by including other social amenities as well as hospitality services in order to offer different services at one place.

11. Do you have a business plan? Have you ever revised it?

The owners have a business plan aimed at continuous provision of high quality food products, drinks, and services. They revise the plan every year to accommodate new challenges and opportunities in the related sector.

12. Do you do your own financials, or does someone do them for you?

The three men established the business with their own financial resources. Due to the high profits they have been gaining over the years, the businesspersons have enough financial resources to sustain the business and expand their operations in the future considering the arising demands.

13. How do you do your marketing/market research/advertising? How do you find new customers? Do you have many returning customers and if so, how do you measure them?

Considering the Internet development, the business uses social media platforms for marketing, its website and product promotion. This has helped in retaining existing customers and attracting the new ones. They measure returning customers based on the records of repeated orders from the same people or addresses.

14. Do you have a succession plan in place, for someone to take over your business someday?

Despite the fact that the owners stated they had succession plan, it remains confidential information. The refused to reveal the secret about the businesss success plan.

15. Do you have any family/friends who work in your business? Why/Why not?

Apart from Denis, Steve and Casey who are friends and business partners, Sams family are also shareholders in the business. The three friends share a common goal and vision. They also rely on Sams family as the founding members of the business with vast experiences.

Conclusion

In is possible to suggest several opinions after revision of two business entities. First, when operating a franchise business, it is recommended to exploit the brand name of the franchisor and its customer loyalty in order to ensure high sales and profit. Despite the fact that the franchisee products major sell the franchisors products, a good marketing strategy is necessary and this applies to both franchised and non-franchised businesses. Another recommendation is that a non-franchised business should undertake a complete control and freedom to provide products and service diversification. This would help Sams Bar and Grill in accommodating major needs of the customers at one place. When the customers obtain high quality products and services in the same premise, they do not need to move from one place to another in search of those services. Although McDonalds Hamburgers offers products under restricted conditions by the franchisor, it should completely exploit the already established brand name of McDonalds and customer loyalty to capture the high market share in the area. In conclusion, although a franchised business and non-franchised business have some aspects of similarities related to operation and marketing, they have significant differences in start-ups, diversifications of products and services, acquisition of financial resources, and degree of freedom in doing business. As stipulated in the above discussion, it is necessary to analyse and examined these differences and similarities to establish a strong plan of growth.

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