Franchising agreements in business

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Tutor’s Feedback TMA ANSWERS A1) Franchising which is an agreement between the franchisee and franchiser which gives the franchisee the right to sell or promote franchiser’s product and services using the franchiser’s trademark. Franchising has growing rapidly lately, you can see franchises everywhere. KFC, McDonalds, Nike and much more are very good example of successful franchise that encourages franchising. Franchising has been luring many business men, it can be called as buying success since you’re buying an already established and successful business. Franchising can be beneficial for both the franchiser and the franchisee. The franchiser get more motivated, the expansion becomes faster, lowers operation cost The franchisee on the other hand get management and assistance training, financial assistance from the franchiser according to their agreement. Brand recognition is another benefit for the franchisee. The franchiser has already identified customer need and fulfilled this need by creating a certain product. Since many small business’ fail in their first five years, buying a franchise risk is fewer compared to starting your own business. However acquiring a franchise alone won’t always mean success. Checking the financial status of the franchiser is important .The franchise fee can sometimes be so high or the royalty fees paid. A franchisee must investigate the business they are going to buy before signing any agreement, and choose a suitable business that can be successful in the franchisee business environment and culture. For example in Saudi Arabia buying the fast food franchises are successful because people there like fast food and are more likely to buy fast food rather than preparing it at home. A2) CDX or Coffee Day Express is a unique business that has achieved great success in catering service. There are main market segment are youth. There expansion was noticeable and was due to a number of factors. The shift in people’s food habits in past few years was a major factor in the growth of the business. Due to the busy life people is having they consider instant food as favorable. Factors like rising dual incomes, standard of living, convenience, and influence of western culture has further fuelled this trend. As result CDX became a leader in this field of business. The business made huge success in the field of takeaway just few years from its beginning. CDX had a number of strengths that helped them be in their expansion and growth. These strengths include their unique trends and their extraordinary products that tastes great. Their products are considered as their USP. Their standards were exceptional, their wide rang menu products attracted different customers and they were consistent on providing new flavors and products. The elegant and hygienic packaging of the products ensure that healthy standards were maintained. With the quality and freshness of services offered in relatively fast time, the hygiene standards, and at affordable prices Coffee Day Express were superior to their competitors. The great success of CDX made it a hot opportunity for franchisees, they were also offering profitable partnerships to those who want to franchise their brand which made interest even increase.

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