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FRANCHISING, LICENSING, & HARVESTING: CASHING IN YOUR BRAND

FRANCHISING, LICENSING, & HARVESTING: CASHING IN YOUR BRAND. UNIT 5• CASHING IN THE BRAND. Class Name Instructor Name Date, Semester. Learning Objectives After this lecture, you should be able to complete the following Learning Outcomes.

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FRANCHISING, LICENSING, & HARVESTING: CASHING IN YOUR BRAND

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  1. FRANCHISING, LICENSING, & HARVESTING: CASHING IN YOUR BRAND • UNIT 5• CASHING IN THE BRAND Class Name Instructor Name Date, Semester

  2. Learning Objectives After this lecture, you should be able to complete the following Learning Outcomes 1. Determine how you want to grow your business and eventuallyexit from it.2. Describe how businesses use licensing to profit from theirbrands.3. Explain how a business can be franchised.4. Learn methods of valuing a business.5. Discuss five ways to harvest a business.

  3. 14 What do You Want from Your Business? Sell • Sell to others • Merge Maintain Grow • Generate internally • Acquire others • License your brand • Franchise the business Close • Cease Operations • Bankrupt

  4. 14 What Do You Want from Your Business (cont.) Continuing the Business for the family Growth through Diversification Diversification – the addition of product or service offerings beyond a business’s core product or service.

  5. 14 Growth through Licensing and Franchising Licensing - “renting” you brand or other intellectual property to increase sales. Replication Strategy – (franchising) a way to obtain money from a business by letting other copy it for a fee.

  6. 14 Focus Your Brand A name, term, sign, logo, design that identifies a product/service Represents a promise to consistently meet customer expectations Line Extension – the use of an established brand to promote different kinds of products • Can work if brand is very strong & new products relate well • Potential damage if products don’t reinforce the brand

  7. Franchising Revisited from the Franchisor Perspective 14 There are both benefits and drawbacks to being a franchisor. The benefits include: • Growth with minimal capital investment. • Lower marketing and promotional costs • Royalties The drawbacks of franchising to the franchisor include: • The franchisee may disregard training and fail to operate the business properly. • It can be difficult to find qualified or trustworthy franchisees. • Franchisees that do not experience success may withhold payment and/or sue the franchisor. • There are many federal & state regulations in franchising making it difficult and costly in some circumstances.

  8. 14 How a McDonald’s Franchise Works McDonald’s franchisees are taught precisely how many minutes to fry potatoes and when to turn a burger, among a host of other details including how to greet customers. A McDonald’s franchisee owns the restaurant, but agrees to market the food under the McDonald’s name and trademark in the exact fashion developed by Ray Kroc. McDonald’s, as a franchisor, receives a franchise fee and royalties.

  9. 14 Do Your Research before You Franchise Consult with a franchise attorney Visit the International Franchise Association (http://www.franchise.org) & the American Association of Franchisee & Dealers (http://www.aafd.org ) websites Create a Franchise Agreement

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