Franshising Case Study

1. When starting up a business, the factors which need to be addressed include the following; the business idea, finance, human resources, enterprise, fixed assets, suppliers, customers, marketing and legal issues. However, a franchise is an already established business which a franchisee chooses to be apart of, working on the franchisor's business model. This lacks innovation due to the fact that the franchisor has already established a business idea which has been tested and proved succesful. In terms of finance, though the franchisee funds the franchise the start-up costs are lower as the franchisor has already developed, for example, market research and product development. Adding to this, there is less risk as the franchisee has a succesful model to work from, reducing the risk of loosing money as they can predict the success of the franchise. Human resources, enterprise and suppliers are all factors taken care of by the franchisor in the sense that they are already established with no need for the franchisee to deal with these aspects. The franchisee chooses the location which is another risky factor, yet working on the established business model, the franchisee can predict an estimated amount of revenue depending on the local market hence the amount of sales can be approximated. Adding to this, the franchisor has attracted customer's to their business and is in charge of, for example, promotional campaigns therefore the franchisee has little or no say in these. Another aspect to consider is that it is in the best interest of the franchisor for the franchise to be succesful therefore they will assist the franchisee with what could be services giving advice on financial management as well as providing training to staff. Setting up a franchise therefore lacks the entrepreneurial aspects of setting up a business. Though a franchisee may benefit from experiencing the day-to-day workings of owning a business, they have very little to think about in terms of setting up a business.


2. Baseball has become a huge money-making industry and no longer just a sport. The point to consider is that even if the team isn't succesful in the game of baseball, the business enterprise itself can gain revenue from anything from the tickets sold, car parking costs, merchandising and so on. Furthermore, rewards of succesful management of any team results in revenue which is not necessarily influenced by the success of their game. For example teams with vulnerability of being bought off by Portland Oregan include the former 'Expos' because they are one of the cheaper teams to buy, with reasonable operating income and current value as well as the lowest revenue (according to forbes statistics). This will make it easier for Portland Oregan to secure a cheaper bid - a benefit for their business. Their next step would be to improve the management and possible revenue from factors outside the game such as the above mentioned merchandising, number of tickets sold etc... Therefore, though there are many factors to consider when a bidder chooses a team, they are able to estimate which team is cheaper to buy yet reasonable current value - basically a balance of various factors mentioned above.


3. If the English Soccer Premier League were to become franchisers just like MLB Inc. they would gain further control of the football industry within the UK, focusing on the business aspects.