engleski

Franchising

Franchising is a business model that applies to starting-up and growing a business venture. The franchise relationship connects two parties: the franchisor and the franchisee, where the franchisor is a company that has, thanks to the experience of doing business in an industry, developed a successful business model and a recognisable brand and wants to expand the business to other geographical areas. Franchisee is most often an entrepreneur who is just starting out in an industry and sees an opportunity in implementing the franchisor’s successful business model in their local area. The key theories that explain the reasons for applying the franchise business model are resource scarcity theory and agency theory. Both of these theories point to the challenges faced by franchisors when applying this model as a business growth strategy, and the possible answers. There are many types of franchises, but by their application, two basic models described in this chapter stand out: product distribution franchise and business format franchise. In academic discussions related to franchising, debates about the assessment of the entrepreneurial capacity of franchisees are the most frequent. This chapter highlights arguments that affirmatively evaluate the entrepreneurial behaviour of franchisees, emphasizing the necessity of franchisees’ entrepreneurial behaviour in identifying business opportunities, team selection and taking risk in the form of financial investment required to join a franchise network. Finally, this chapter highlights that implementation of franchising as a strategy of starting-up or growing a business requires careful preparation and analysis in order to avoid negative experiences of franchisors and franchisees whose cause mainly lies in unrealistic expectations and erroneous assessment of the role of each of the parties in this relationship in achieving synergistic effects.

franchising ; competitiveness ; growth ; small and medium enterprises

nije evidentirano