Introduction
This presentation will be evaluating the discussing the characteristics and various aspects related to the franchising business and as it is one of the biggest examples of international marketing. The franchising business revolves around a contractual relationship between the franchisee and the franchiser (Griffith 2019). Apart from that, it will clearly portray the transactional and supportive relationship between the franchisor and franchisee in order to create a business or distribute a specific product or service to the consumer or the target market. Apart from that, the assistance received through the franchising business and the co-operation between the two parties are the prime advantages of this type of entrepreneurship business. This presentation will further discuss the characteristics long with the macro environment analysis. There are several strategies to address the franchisor-franchisee conflict, which are also discussed in the presentation. The franchising business that has been selected for this presentation is the fast-food restaurant chain.
Characteristics of a franchise
The key characteristics of the franchising business are following:
Support and assistance:
The franchisors are responsible for supporting and guiding the franchisee partners. Thy are also responsible for providing them with necessary training and advertisement support. Apart from that, the supports are also provided by the franchisors in terms of business decisions, mentorship, skill development, to the franchisee. For example, KFC decided to invest in the franchisees to penetrate the global market and it supports them with timely supply and development opportunities.
Start-up benefits:
The start-up or entrepreneurship ventures often face financial constraints and the cost of advertisement and research on the different business models often create huge financial burden on the entrepreneurial ventures (Klein et al. 2019). Therefore, the start ups will be immensely benefitted by the franchise mode of operations as neither they will need to invest and research on a new business model, not they need to develop the brand awareness and brand recognition from scratch.
Shared access:
The franchising business involves sharing an access to the resources of each other. The franchisor gets benefitted through the royalties and fees received in exchange of the franchise while on the other hand, the franchisees gets benefitted through the already developed business models and advertisements along with the skills and expertise provided by the franchisors.
Macro Environment Analysis
The PETSTLE and porter’s five forces are the strategic tools that enables a business to analyse the macro environment along with the opportunities and threats present in that environment.
The PESTLE analysis of the franchisee fast food chain is portrayed below:
Political factor: The government rules, regulations, and tax policies along with the special restrictions for the fast-food chains are the key influencing factors behind the further expansion of the franchising business. For example, the Brexit and Russia Ukraine war disrupted the supply chain and created a barrier in the operations of the business
Economic factors:
The economic factors such bas inflation, monetary policy, tax rate, interest rate and market growth opportunities are some of the key influencing factors behind the franchise expansion. For example, USA is facing a rising rate of inflation within the country and it is further limiting the purchasing power of the consumers as the cost of living is also high there. The rate of inflation increased by almost 3 percent than last year (Statista 2024). Therefore, it can further adversely impact on the franchisee business of the restaurant.
Social factors:
With the increasing affiliation towards the luxury lifestyle and enhanced spending on the enjoyment, the consumers are visiting restaurants more often than usual. However, the increasing awareness of healthy life and wellbeing is further making their food habits shifting towards the healthier options and vegan foods.
Macro Environment Analysis
Technological factors:
The technological advancements along with the advent of AI can transform the operations of the franchise businesses and streamline the operations. For example, the AI and machine learning can be used in providing virtual menu cards, and automate the reservation process in the restaurants (Berezina et al. 2019). It can further assist the consumers through the dedicated website or the online applications.
Environmental factors:
he environmental factors should be considered by the business by opting for the sustainable operations and activities. The franchisee business can opt for the clean energy sources, sustainable and biodegradable packaging along with the ethical sourcing or local sourcing of the ingredients benefit the people, plant, and the environment.
Legal factors:
The legal factors such as the government rules and regulations along with the desirable standards should be followed by the franchisee business. For example, the labour and employment rules should be adhered by this business. On the other hand, the other rules, and regulations such as health and safety law, data privacy laws are the top concerns of this franchise fast food chain.
Macro Environment Analysis
The porter five forces portray the competitive forces in the external marketing environment:
Bargaining power of the consumers (High): The bargaining power of the consumers is high as there are so many fast-food franchises in USA which are serving good food at an affordable price range.
Bargaining power of the suppliers:
The Bargaining power of the suppliers is also high since the suppliers are responsible for providing timely delivery of the ingredients and ensures smooth functioning of the process.
Threat of new entrants:
This franchisee has already established itself in the global fast-food market which further reduces the threat from the new entrant restaurants with limited resources
Threats of the alternatives:
The threats from the alternatives is low for this franchisee business as the business has huge potential for offering unique foods and beverage which can hardly be replaced.
Threats from the competitors: There are several rivals and competitors of this business. For example, the KFC and McDonalds are the key players n the global fast-food joints along with the Burger king and Subway (Christian and Gereffi 2018).
Relation with franchisor and key success factors
The relationship with the franchisors of this business is very engaging and harmonious. The franchisors are approachable, supportive and they also offer prompt suggestions and guidance to deal with any adverse situations. Apart from that, they conflict frequent training and assistance sessions for the franchisees like us and encourage us to share our grievances so that a transparent communication is maintained. However, the key support factors behind a positive franchisee- Franchiser relationship is portrayed below:
Supportive commitment:
The commitment to guidance and training support should be fulfilled by the franchisers to sustain the faith of the franchisees and create an amicable bond.
Active communication: A clear and effective communication and reduce the misunderstanding and misinterpretations (Aririguzoh, S., 2022). Therefore, a clear mode of communication should be established between both the parties to ensure the clarity in the operations.
Mission vision and values:
The mission, vision and values of the franchisee and franchisor brand should align with each other to ensure smooth functioning. The conflicting values can lead to failure of the business.
Strategies to avoid conflicts with the franchisors
Having a communication.:
A clear and transparent communication system should be established between the franchisee and franchisor to make the most of the opportunities. It will further help to provide clarity to both the parties and reduce the scope of business failure.
Training and development:
Training and development are the key to upheld the values of the franchisors and making the franchisee familiar to their functioning. Therefore, the training sessions should be conducted to enhance conflict resolution techniques and increase the cohesion between two parties.
Adaptability and flexibility:
Working in a franchise business is equivalent to the team work or effective collaboration. The team work and effective collaboration further requires the effective cohesion and positive group dynamics through adaptability and flexible approach. Therefore, these factors can help to avoid the conflicts.
Marketing mix- Improved
Product mix:
The product mix should involve the introduction of the healthier alternatives of the popular dishes along with the incorporation of sustainable packaging in the business. Apart from that, the production process should also incorporate the sustainable initiatives.
Price mix:
The competitive price should be set to be at par with the string competitors. The competitive pricing involves setting prices according to the price set by the consumers,
Place mix:
The franchise business should strengthen their website and develop an online application to facilitate online delivery of foods. Apart from that, the food should be sold through third party food delivery application considering the preferences of the USA consumers.
Promotion mix:
The social media marketing is one of the most effective way to retain the consumers and strengthen the brand image by gaining a huge number of the consumers. Therefore, the Franchise fast food chain should also incorporate that as USA has a high social media penetration. The social media penetration in USA is more than 91 percent (Statista 2023).
Conclusion
This presentation has clearly portrayed the various factors related to the franchise business and discussed its characteristics. Apart from that, the various Macti environment analyses were performed using Porter and PESTLE tools. On the other hand, the relationship dimensions between the franchisors and franchisees were explored. The marketing mic further portrayed the new product, price, place and promotional aspects to meet the local needs. If the strategies are implemented properly, they can yield huge benefits in terms of the success of the franchise.
References
Aririguzoh, S., 2022. Communication competencies, culture and SDGs: effective processes to cross-cultural communication. Humanities and Social Sciences Communications, 9(1), pp.1-11.
Berezina, K., Ciftci, O. and Cobanoglu, C., 2019. Robots, artificial intelligence, and service automation in restaurants. In Robots, artificial intelligence, and service automation in travel, tourism and hospitality (pp. 185-219). Emerald Publishing Limited.
Christian, M. and Gereffi, G., 2018. Fast-food value chains and childhood obesity: A global perspective. Pediatric Obesity: Etiology, Pathogenesis and Treatment, pp.717-730.
Griffith, K.L., 2019. An empirical study of fast-food franchising contracts: Towards a new intermediary theory of joint employment. Wash. L. Rev., 94, p.171.
Klein, M., Neitzert, F., Hartmann-Wendels, T. and Kraus, S., 2019. Start-up financing in the digital age: A systematic review and comparison of new forms of financing. The Journal of Entrepreneurial Finance (JEF), 21(2), pp.46-98.
Statista 2023. Inflation in Australia. Available at:https://www.statista.com/topics/9766/inflation-in-australia/
Statista 2023. Social media usage in USA. Available at:https://www.statista.com/topics/3196/social-media-usage-in-the-united-states/#:~:text=As%20of%202022%2C%20the%20United,rate%20of%20over%2091%20percent.
