Table of Contents
US-based companies have used franchising as a route to expansion for many years. While the business system franchise model is only viable in certain sectors, such as foodservice and lodging, some companies are now almost exclusively franchisors, not owner-operators. This Case Study explains why the model is so attractive to franchisors, and also explores some of the downsides.
Features and benefits
* Discover what business system franchising involves.
* Examine the roles of franchisor and franchisee in the US quick service restaurant sector using value-chain analysis.
* Find out about the benefits and risks associated with franchising in the US lodging sector using SWOT analysis.
Major franchisor companies' market capitalization has been outperforming the S&P 500 index for several years.
A value-chain analysis of Burger King shows that the primary activities of Burger King itself are not the same as the primary activities of the whole system. The system is a foodservice provider, but Burger King mainly provides intellectual property: product design, branding and marketing, and business process development and training.
•A SWOT analysis of leading US hotel chains reveals the advantages of multi-brand franchising in defending revenues in a cyclic industry and expanding into developing markets. It also suggests that finding reliable franchisees with good access to credit, and defending intellectual property in certain countries, may be key challenges.
Your key questions answered
* What is business system franchising?
* What characteristics of an industry make it a good candidate for expansion through franchising?
* Why do so many US quick service restaurant chains operate on a franchising model?
* What are the risks of franchising in the US lodging industry?
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