Question

A franchise is when an owner of a trademark, trade name, or copyright licensees it to a separate party to use to sell goods and/or services. Many websites are dedicated to franchise opportunities, and the Small Business Administration (SBA) also provides information on franchises (www.sba.gov). Identify a franchise business and list the requirements needed to purchase franchise. What are the costs of franchising this business? Do you feel the franchise fee is reasonable? Why or why not? Look at the businesses your fellow students have identified, which ones have the greatest risk vs. reward? Which are the safest? Why?

Answer 1

A franchise business that I have identified is that of franchise of ‘SUBWAY’. To obtain a franchise of Subway a minimum investment of $100,000 is required (in the California area). Besides the investment other mandatory requirements for obtaining franchise of Subway is being passionate and having a dynamic entrepreneurial spirit. A deep commitment is also required for building a successful business and as a business partner the prospective franchise partner should thoroughly enjoy working with people, be able to learn new skills and should be able to take challenges heads on.

Yes, I think the franchise fee is reasonable. This is because the company will provide support in the form of training, product development, advertising, as well as field support. Besides Subway is a popular brand and as consumers are becoming more health conscious they are shunning consumption of junk food and fatty fast foods and instead are showing growing preference to consume healthy foods. Subway offers healthy food options and its food products have high nutritional value. This guarantees a strong market to me as a franchise partner. Considering all of the above the franchise fee is certainly reasonable.

Businesses that my fellow students have identified are in the industry of courier, employment and staffing, home services, tax franchise and children’s franchises. Of these the businesses that have greatest risk vs reward profile are businesses in the industry of employment and staffing, home services etc. This is because during times of economic recession demand for these products will nosedive and as such the income of franchise partner will get significantly reduced. On the other hands businesses in the industry of services like tax services, accounting services and children related educational and recreational products and services is relatively cushioned from economic situation and hence they are regarded as safest.