Franchsing.pdf

A VERY BRIEF HISTORY OF FRANCHISING time. The earliest fast-food franchise was A&W Root Beer, established in 1924, with Howard Johnson being the first to fran...

A VERY BRIEF HISTORY OF FRANCHISING time. The earliest fast-food franchise was A&W Root Beer, established in 1924, with Howard Johnson being the first to franchise restaurants in 1935. Most business historians date the beginning of franchising as a concept to the An early pioneer in service franchising was Arthur Murray Dance Studios, Middle Ages, when feudal lords initiated the practice of selling to others the rights which got its start in 1938. to collect taxes and operate markets on their behalf. However, this makes the earliest examples of franchising a political activity rather than a business activity. Franchising really took off as a form of business in the 1950s and 1960s, when The first examples of franchising as a way of doing business are found in mid- many of the current large franchise chains, businesses such as Tastee-Freez, KFC, nineteenth century Germany, where brewers set up contracts with tavern owners McDonald's, and Burger King, were established. The acceleration of franchising in to sell their beer exclusively in the taverns. the 1950s and 1960s can be attributed largely to two factors: the rise of television advertising and the establishment of the national highway system. The former In the United States, the earliest example of the use of franchising was not found in made national advertising a viable way to build a brand name. As a result, for the breweries and taverns. Instead, it occurred in the sale of products to housewives first time, it became possible to have a national chain whose competitive advantage located on the American prairie. In 1851, Isaac Singer became the first was based on a recognizable name. The latter made travel to unfamiliar locations American product name franchisor when he began to sell to traveling more common and created the need to have national brand names as a way to independent salesmen the rights to sell his sewing machines to end users. demonstrate quality to customers in these locations. Although the Singer Sewing Machine Company was the earliest American Perhaps because of the growth of franchising in the 1960s, that decade witnessed product name franchisor, it was relatively quickly outpaced by an even more the formation of a flurry of fly-by-night franchise operations that established their important product name franchisor: Coca-Cola. In the early 1890s, Coca-Cola systems, sold them to franchisees, took the franchisees' money, and quickly shut chose to franchise the rights to bottle its carbonated beverage to a large down. The loss of many people's investment in these franchises led to the number of independent businessmen who received exclusive territories in beginning of franchise regulation in the 1970s. The Federal Trade Commission which to distribute the product in return for paying for and assuming the risk (FTC) initiated its first franchise fraud investigations in 1975. In that same of, distributing the product. year, the North American Securities Administration drew up draft guidelines for Uniform Franchise Offering Circulars (UFOCs), which have become the Certainly, Coca-Cola was an important early product name franchisor, but it might standard form for disclosing franchise opportunities to franchisees. This not have been the most important one to begin operations at the turn of the 20th growing federal effort in the 1970s also culminated in the establishment of century. That distinction might be reserved for the pioneers in the American disclosure requirements and business rules for selling franchises by the FTC in automobile industry, which began to franchise at that time. Both Ford and 1979 and the start of the regulated era of franchising. As a result of this effort, General Motors began to franchise dealerships to independent business franchising is now a regulated form of business, making an understanding of the people to sell cars under their brand names to end users because the legal environment in which it operates important to you as a franchisor. companies did not have sufficient funds to create the needed retail outlets when they first began operations. Franchising has a track record as a way to speed growth through expansion of business. Recent estimates anticipate franchise unit growth to become Another important innovation in franchising was the development of conversion turbocharged. Since the 1950’s, franchising has been the leading edge of franchising. Conversion franchising is the process of turning independent business by showing impressive growth rates in overall sales and market businesses into franchisees under the umbrella of the franchisor's brand share. Franchising is often considered a single industry, but actually it is not. name. The major oil companies were the pioneers in this activity when they began Do not think that McDonald's, Burger King, Dunkin Donuts and Wendy’s is all there to offer independent repair stations the right to use their trademarks in the 1920s. is to franchising. Franchising is found in 65 different kinds of industries, from Fast food, to healthcare, hotels, automobiles, home cleaning, education, leisure time We can also date several other pioneers in franchising in retail and service services, home improvement, travel, pet care, funeral services, printing, businesses to the 1920s and 1930s. Perhaps the earliest retail franchisor is Ben accounting, e-business and so forth. Franklin stores, which started in 1920 and began to franchise around that A Franchisor uses the franchise’s community goodwill, financial equity, franchisor. The franchisor permits the franchisee to use the franchisor’s business location, and personal drive and motivation to expand the franchise trademark, name and advertising. system. The franchisee uses the franchisor’s brand or trademark, proven methods of operation, marketing resources, and technical advice to enter, For the franchisor, the franchise approach to business allows growth through an develop, and maintain consumer demand, and ultimately to succeed as a expanding distribution system. For the franchisee, it provides an opportunity to small business owner-operator within the community. The franchisee is succeed as a small business owner because of the knowledge, methods, competitive often given the opportunity to be part of a turnkey operation (which involves experience, and advertising clout of the franchisor. The franchising method allows the site, building, architecture, equipment, work flow, and customer service the franchisor and franchisee by providing an agreement that allows both to bring plans completely determined and installed by the franchisor), with limited their particular strengths to the business arrangement. capital and prior experience, while having a good chance of success. 3 MAJOR COMPONENTS OF THE FRANCHISE OPPORTUNITY: FRANCHISING- is a business opportunity by which the owner (producer 1. A trademark or logo or distributor) of a service or a trademarked product grants exclusive 2. The use of a product or service following the marketing plan rights to an individual for local distribution and/or sale of the service or 3. A payment or royalty fee - is an ongoing fee that the franchisee pays to product, and in return receives a payment or royalty and conformance to the franchisor. This fee is usually paid monthly or quarterly, and is quality standards. typically calculated as a percentage of gross sales. FRANCHISE is a type of license that grants a franchisee access to a franchisor's proprietary business knowledge, processes, and trademarks, thus allowing the franchisee to sell a product or service under the franchisor's business name. In exchange for acquiring a franchise, the WAYS OF DESCRIBING FRANCHISING franchisee usually pays the franchisor an initial start-up fee and annual BUSINESS OPPORTUNITY - the owner (producer or distributor) of a licensing fees. service or a trademarked product grants exclusive rights to an FRANCHISOR is the individual or business granting the business rights to individual for local distribution and/or sale of the service or product, a franchisee. and in return receives a payment or royalty and conformance to FRANCHISEE is the individual or business granted the right by the quality standards. franchisor to operate in accordance with the chosen method to produce or PATTERN OR METHOD OF DOING BUSINESS - a franchisee is granted sell the product or service. the right to offer, sell, or distribute goods or services under a marketing DIFFERENCE OF FRANCHISOR & FRANCHISEE? format which is designed by the franchisor. FRANCHISE OPPORTUNITY – 3 components, a trademark or logo, the FRANCHISEE – a person who purchases a successful franchise from a business use of product or service following a marketing plan, and a payment or owner. While the franchisee will run their branch or branches somewhat royalty fee. independently, they must still follow the guideline and standards set forth by the LICENSING RELATIONSHIP – A franchisor of a product, service, or franchise owner. business method grants distribution rights to affiliated dealers (the franchisees); these rights often include exclusive access to a defined FRANCHISOR – a person who started the business that become so successful that geographic area. they decided to allow others to replicate it by opening up their own locations CONTINUING RELATIONSHIP – A franchisor provides a licensed (franchises) for a fee. The franchisor outlines and business model all franchisees privilege to do business and provides management and technical must follow. assistance and training in return for a consideration from the According to the US Department of commerce: Franchising is a method of doing franchisee. business by which a franchisee is granted the right to engage in offering, selling, or distributing goods or services under a marketing format which is designed by the TYPES OF FRANCHISES Franchising is a relatively flexible method, and just about any type of and/or service. Business format franchising is the most business can be franchised. There are many types of franchises, that can be popular type of franchise system and the one generally categorized according to different factors, like investment level, franchisor’s referred to when talking franchising. The most popular are fast strategy, operations, marketing and relationship models, etc. The five major food, retail, restaurant, business services, fitness and other. types of franchises are: job franchise, product franchise, business format franchise, investment franchise and conversion franchise. 4. INVESTMENT FRANCHISE - Typically, these are large scale projects which require a large capital investment, such as hotels and the larger 1. JOB FRANCHISE - Typically, this is a home-based or low investment restaurants. The franchisees usually invest money and engage either franchise that is taken by a person who wants to start and run a small their own management team or franchisor to operate the business and franchised business alone. Franchisee usually has to purchase minimal produce a return on their investment and capital gain on exit. equipment, limited stock and sometimes a vehicle. A wide and diverse range of services fall into this group, like travel agency, coffee van, 5. CONVERSION FRANCHISE - Conversion franchising is a modification domestic lawn care service, plumbing, drain cleaning, commercial and of standard franchise relationships. Many franchise systems grow by domestic cleaning, cell phone accessories and repair, real estate converting independent businesses in the same industry into franchise service, shipping service, pool maintenance, corporate event planning, units. The franchisees adopt trademarks, marketing and advertising children’s services, etc. programs, training system and critical client service standards. They also usually increase procurement savings. The franchisor in this 2. PRODUCT (OR DISTRIBUTION) FRANCHISE/ PRODUCT AND model has a potential for very rapid growth in terms of units and TRADE NAME FRANCHISING - a franchising relationship in which the royalty fee income. Examples of industries that extensively use dealer acquires the trade name, trademark, and/or product from the conversion franchising are real-estate brokers, florists, professional franchisor/supplier. services companies, home-services, like plumbing, electricians, air Product-driven franchises are based on supplier-dealer conditioning, and so on. relationships, where franchisee distributes the franchisor’s products. The franchisor licenses its trademark but usually EARLY FRANCHISING IN THE UNITED STATES does not provide franchisees an entire system for running their business. Product franchises deal mainly with large The earliest example of franchising in the U.S. is the products, such as cars and car repair parts, vending machines, McCormick Harvesting Machine Company, which in 1850 computers, bicycles, appliances, etc. Product distribution commissioned “exclusive local agents” to sell and service its franchising represents the highest percentage of total retail machinery. sales. Some well-known product distribution franchises are The first example of a consumer goods firm to use a franchise- Exxon, Texaco, Goodyear Tires, Ford, Chrysler, John Deere and oriented system of distribution was the Singer Sewing other automobile producers. Sometimes franchisor licenses Machine Company. During the 1850s, Singer experienced not only distribution, but also part of the manufacturing difficulty in marketing its new product. Because the sewing process, like in the cases of soft drink manufacturers Coca-Cola machine was an innovative product. and Pepsi. AUTOMOTIVE INDUSTRY 3. BUSINESS FORMAT FRANCHISE - Involves a specific FORMAT or In 1898, William E. Metzger of Detroit became the first approach required by the franchisor of the franchisee to following franchisee of the General Motors Corporation (makers of when providing the products and/or services to the customer. Buick, Cadillac, Chevrolet, GMC, Holden, and Wuling). The business format franchisee also gets to use the Henry Ford envisioned mass production and mass sales of his franchisor’s trademark, but more importantly, it gets the Model T. He focused on establishing dealers in as many entire system to operate the business and market the product communities as possible.  The Auto industry emerged as the first industry to use the 10. Hampton by Hilton franchise approach to distribution. 11. Popeyes Louisiana Kitchen 12. Arby’s FRANCHISING FROM 1950 TO 1990 13. The UPS Store 1. 1955 - Ray Kroc started McDonald's stressing “quality, service, 14. Ace Hardware cleanliness, and value.” 15. Baskin-Robbins - Harlan Sanders started Kentucky Fried Chicken 16. Hilton Hotels & Resorts 2. 1959 - International House of Pancakes 17. Wendy’s 3. 1960 - Clothing, business service, groceries, convenience stores, 18. Double Tree by Hilton laundries, lawn services, printing, security system and vending are the 19. Dairy Queen type of businesses that entered the franchising field for the first time. 20. Papa John’s 4. 1979 - Federal Trade Commission passed the rule “Franchise TOP 10 BEST FRANCHISE IN THE PHILIPPINES 2022-23 Disclosure Act which identifies the Franchise Disclosure Document (FDD) that is prepared by the franchisor and given to a prospective There are over 1,000 franchises in the Philippines and it can be difficult to know franchisee prior to the establishment of a Franchise Agreement. which one is right for you. Here are the ten best Philippine franchises: 5. 1980s – Franchising opportunities had rapid growth in the service industries such as restaurants, computer, electronics and convenience 1. JOLLIBEE FOODS CORP (JFC) - is a fast food restaurant chain that food store businesses. specializes in Filipino fast-food dishes. They offer chickenjoy, hamburgers, and pizza. There are over 1300 JFC locations throughout the Philippines. In the Philippines, where business format franchising started in the 1970’s (except BURGER KING – In 2011, Jolibee Foods Corp bought a 54% stake in A&W, which was here earlier), one of the first was McDonald’s, which opened its the Philippine franchise. JFC in the Philippine franchise led to the first outlet in 1981. At the time, a small chain of ice cream joints began selling increased popularity of the restaurant chain and greater profits for its burgers – “Jollibee”, which is today the number one franchise company in the owners. country. The success of Jollibee is a mystery to the top guys of McDonald’s in PHO24 – The SuperFoods Group announced in 2018 that a 60/40 joint Chicago, since they were always the number one in the fast-food industry in every venture with Jollibee. This joint venture will focus on the production country they operated – except in the Philippines. and distribution of Vietnamese food. PANDA EXPRESS – In 2019, JBPX Foods Inc. entered a joint venture Today, more than 950 franchisors, majority local, operate in the country, and the agreement with Panda Express to create a food product line for number keeps growing to the advantage of consumers – more competition, more Filipinos. choices, more bargains. Almost all of them are in the food business. Some of them HIGHLANDS COFFEE – Jollibee acquired Highlands Coffee through the are exporting their franchise system to other countries. SuperFoods Group to compete with Starbucks. TOP 20 GLOBAL FRANCHISES 2023 YONGHE KING – Yonghe King is a Chinese fast-food noodle store chain which was bought by JFC in 2004 and was acquired 100% in 2016. 1. KFC Yonghe King is headquartered in Shanghai, China. 2. McDonald’s HONG ZHUANG YUAN – Hong Zhuang Yuan is a Beijing-based 3. Taco Bell restaurant chain that was acquired by JFC in 2008. The restaurants 4. Dunkin serve congee, a type of rice porridge typically served as a breakfast or 5. Pizza Hut lunch dish. 6. Burger King DUNKIN’ DONUTS – JFC and Dunkin’ Donuts entered into a joint 7. 7 eleven venture in 2015 to operate stores in China. The partnership will allow 8. Kumon JFC to expand its presence in the Chinese market, while Dunkin’ Donuts 9. Century 21 Real Estate will gain access to the lucrative Chinese market.  TIM HO WAN – In 2018, JFC acquired 100% of Tim Ho Wan 7. KFC - KFC is another international restaurant chain with a strong presence restaurants in the Asia Pacific master franchise. This investment in the Philippines. They offer chicken meals including buckets of chicken, slowly increased over time and was completed in 2021. fries, coleslaw and a drink. There are more than 170 KFC restaurants HARD ROCK CAFÉ – JFC acquired Hard Rock Café through the across the country. Superfoods Group. This acquisition gives JFC access to a large and well- known restaurant chain with a strong American brand reputation. 8. PCSO LOTTO - A lottery franchise is a business that offers the opportunity SMASHBURGER – In 2015, JFC purchased a 40% stake of Smashburger to purchase a license to operate a lottery. The franchisee is responsible for and completed an acquisition in 2018. all aspects of the lottery operation, from selling tickets to running the THE COFFEE BEAN AND TEA LEAF – In 2019, JFC acquired The Coffee games. There are a number of different types of lotto games in the Bean and Tea Leaf. This popular coffee chain serves up a variety of Philippines, namely 6/42, 6/45, 6/49, 6/55 and 6/58 lotto games. drinks, including iced teas, lattes, and cappuccinos. MILKSHA – In 2021, JFC purchased 51% of shares of Milksha through 9. SHAKEY’S - Shakey’s Pizza is a popular pizza chain that offers franchising Jollibee Worldwide. opportunities. The Shakey’s Pizza franchise can be a “great business” YOSHINOYA – JFC, a Japanese fast food chain, established a 50/50 joint opportunity for someone who is looking for an easy way to start their own venture with Yoshinoya in 2021 to hold the Philippine franchise profitable business. The company offers an excellent product and a proven market. track record, which makes it a good option for someone looking to get into the pizza industry. Shakey’s Pizza R&B’s milk tea Peri-Peri Charcoal 2. MCDONALD’S - This is the biggest and most well-known franchise in the Chicken. Philippines. They offer traditional American cuisine such as burgers, fries, McMuffins, and shakes. There are over 650 McDonalds locations 10. PIZZA HUT - Pizza Hut is another international pizza chain with over 1,200 throughout the country. locations throughout the Philippines. Their pizza options include thin crust pizzas, pepperoni pizzas, and large specialty pizzas such as The Margarita 3. A GASOLINE / PETROL STATIONS - With the rising oil and gas prices Pizza which has toppings including guacamole and sour cream! worldwide, you will surely benefit from the high inflation rate. Filipino TOP 20 FRANCHISES 2024 entrepreneurs can try Shell, Petron, Phoenix, Seaoil, Eastern Petroleum 1. 7 eleven 4. CONVENIENT STORES - 7-Eleven, Ministop, Mini Mart, Family Mart, and 2. Cruise Planners other convenience stores are ubiquitous in the Philippines offering soft 3. Jersey Mike’s Subs drinks, snacks, ice cream cakes and even convenience stores such as 4. Anytime Fitness cigarettes and lottery tickets! 5. Culver’s 6. McDonald’s 5. BAYAD CENTER - Bayad Center welcomes Pinoy entrepreneurs in the 7. The UPS Store finance niche. The minimum cash bond for the Bayad Center would be 8. Five Star Bath Solutions roughly 600,000 pesos, and the franchise fee is 350,000 pesos for 5 years 9. Taco Bell plus 12% value added tax, equipment estimated at around 120,000 pesos, 10. Brightstar Care and site restoration estimated at around 130,000 pesos. The bare 11. Dream Vacations minimum would be 15 square meters. They promise a two-year ROI. 12. PuroClean 13. Ace Hardware 6. PHARMACY / DRUGSTORE - The Generics Pharmacy, Generika Drugstore, 14. Griswold Home Care Southeast Drugstore, Value Aid Generic Pharmacy, Citi Drug 2 and 1. 15. Anago Cleaning Systems 16. Chem-dry Carpet Cleaning 17. Dunkin’ Donuts  18. Greats Clips 11. LAUNDRY AND DRY CLEANING - Sample firms include laundry world, 19. Jan Pro Cleaning Nothing but Laundry, Spin-Off etc. 12. HEALTH AND BEAUTY AIDS. DIFFERENT TYPES OF FRANCHISE BUSINESS 13. REAL ESTATE SERVICES – RE/MAX Phil. 1. RESTAURANTS: The restaurant industry is one of the most dynamic segments of franchising. The majority of restaurants can be classified into one of three categories: INTERNATIONAL FRANCHISING - refers to a domestic business’s expansion into Fast-food (ex. Jollibee, McDonald’s, Burger King or Wendy’s) foreign countries and markets. International franchising is a complex process that Casual dining (ex. Shakey’s, Sizzler or Golden Corral) requires thorough considerations of many factors, such as feasibility, adaptability, Midscale -occupy the middle ground between quick-service and and benefits versus risks. upscale restaurants. They offer full meals but charge prices that KEY TERMS customers perceive as good value. (ex. Coffee lounge, restaurant buffets) BUSINESS-FORMAT FRANCHISING: involves a specific FORMAT or 2. HOTELS, MOTELS AND CAMPGROUNDS - Quality Inns, Holiday Inns and approach required by the franchisor of the franchisee to following when Marriott Hotels. providing the products and/or services to the customer. 3. RECREATION, ENTERTAINMENT AND TRAVEL - Included in this groups BUSINESS-OPPORTUNITY APPROACH: an informal generic description are travel agencies, miniature golf courses, movie theaters and dance about the franchisor-franchisee relationship, wherein an owner of a studios. product or service grants right to an individual for local distribution 4. AUTOMOTIVE PRODUCTS AND SERVICES - Franchise firms specializing and/or sales of the goods or services who, in return, provides a fee or in muffler replacements, lube jobs, oil changes and transmission repair royalty back to the owner. have been able to provide good and efficient services while charging less FORMAT: the approach to be used by a franchisee in providing the than independent dealers. franchisor’s product or service line to the customer. 5. BUSINESS AIDS AND SERVICES - This includes accounting and financial FRANCHISEE: the individual or business granted the right by the planning firms, businesses and services, consulting and brokerages, franchisor to operate in accordance with the chosen method to produce or education and training, gifts and fund-raising specialists. sell the product or service. 6. PRINTING, COPYING, AND SIGN PRODUCTS AND SERVICES - This FRANCHISING: a business opportunity by which the owner (producer or category of franchisors has the highest ratio of franchisors who make distributor) of a service or a trademarked product grants exclusive rights earning claims. Nearly all franchisors require a royalty fee and over 80% to an individual for the local distribution and/or sale of the service or require an advertising fee. product, and in return receives a payment or royalty and conformance to 7. EMPLOYMENT AND PERSONNEL SERVICES - This category has the quality standards. highest ratio of franchisors that require the franchisee be an owner- FRANCHISOR: the individual or business granting the business rights to a operator of the business. franchisee. 8. MAINTENANCE AND CLEANING SERVICES - Examples of franchised PRODUCT AND TRADE NAME FRANCHISING: a franchising relationship opportunities in this category are Carpet and Upholstery Cleaning, in which the dealer acquires the trade name, trademark, and/or product Building Care, and Restoration Services. from the franchisor/supplier. 9. CONSTRUCTION AND HOME IMPROVEMENT. CONVERSION FRANCHISING: is a franchise system in which the already 10. CONVENIENCE STORES - Franchise agreements for convenience stores existing independent businesses are converted into franchises. Hence it are typically written for ten-year terms and large majority require that the allows an independent business to use a national franchise systems name, franchise be the owner-operator. Franchisors require payment of royalty trademark and operating system. and advertising fees. Sample firms in this category include 7-eleven Inc., Dairy Mart Convenience Store, Express Mart, Mini Stop. RECOGNIZING FRANCHISING OPPORTUNITIES Franchising provides the means for a person to own and operate a small business franchisor will generally grant the franchisee limited use of the trademark or trade using a workable business format. Franchising is a joint effort between the name and the system (business format) in return for a royalty fee. (The payment of franchisor and the franchisee with mutually approved activities which may include the franchisee to the franchisor for granting him/her the right for the limited use site selection, interior and exterior decoration, product preparation, advertising, of trademark or trade name and the system (business format). selling skills, buying, and employee training. (FRANCHISING) ADVANTAGES TO THE FRANCHISEE JOINT BUSINESS RELATIONSHIP 1. Established Product or Service. Franchising is an exciting opportunity for franchisor and franchisee. Both have an 2. Technical and Managerial Assistance opportunity to use their capital resources and desire to succeed in a cooperative 3. Quality Control Standards. business relationship in order to generate fair and equitable profits that will 4. Less Operating Capital. reward their individual commitments and efforts. Before committing to a 5. Opportunities for Growth franchising relationship, however, it is important to evaluate the situation of the franchisor and the franchisee and the critical factors of the business opportunity (FRANCHISING) DISADVANTAGES TO THE FRANCHISEE being considered. In Franchising, often the factors critical to success are rooted 1. Failed Expectations. within the franchisor-franchisee relationship. 2. Service Costs. WHAT IS A JOINT VENTURE FRANCHISE? 3. Overdependence. 4. Restrictions of Freedom of Ownership From the outset, the name itself is misleading. It implies that the joint venture and 5. Termination of Agreement. franchise are one and the same, often documented within one legal contract - a joint 6. Performance of Other Franchisees. venture franchise agreement. That perception is the root cause of many problems encountered with this model. A "joint venture franchise" is shorthand for the grant (FRANCHISING) ADVANTAGES TO THE FRANCHISOR of a franchise to a joint venture party. 1. Expansion. WHY WOULD A FRANCHISOR ADOPT A JOINT VENTURE MODEL? 2. Motivation 3. Operation of Nonunion Business. There are many reasons why a franchisor might consider adopting a joint venture 4. Bulk Purchasing. structure but they often involve two, diametrically opposed, objectives. Either the 5. Other advantages franchisor wishes to exert greater control over the franchisee or it wishes to show greater commitment to the franchisee, by committing its own resources to the (FRANCHISING) DISADVANTAGES TO THE FRANCHISOR franchise. 1. Company-Owned Versus Franchised Units. FRANCHISING BASICS 2. Potential Problem of Recruitment. 3. Potential Problem of Communication Franchising is a successful means of operating a business for two primary reasons: 4. Loss of Freedom. 1. The preparation a franchisee undertakes before opening a licensed franchise outlet, and 2. The degree of personal involvement brought to the business activities by both franchisee and franchisor. The greatest difference between starting a franchised business venture and opening an independent business lies in the training and preparation provided to the franchisee prior to opening the franchised outlet. A franchisee is taught how to initiate, run and control all ownership and operating functions of the business. A