Category: Franchising

Executive Summary

This project proposal is presented to source for financing of opening of a Papa John’s franchise. The proposal includes a critical analysis of all the estimated costs, scheduling and justification. These costs are matched against the forecasted revenues from the projects over a five years period.

The completion of acquisition of Papa John’s franchise will grant the franchisee the exclusive rights to operate the business of making and distributing pizzas under the Papa John’s franchise.

The acquisition of this franchise will see the operations begin in less than a month. This is because the Papa John has an offer of up to $50,000.00 worth of free equipment upon acquisition of the franchise rights and signing of the agreement. The rest of the major costs will be leasing of a building which is readily available.

Other operational costs are incurred once the business in running and these can be met by the working capital float. The process of acquiring the franchise rights will take up to a maximum of two weeks and operations can begin in a month’s time once the funds are availed and the materials and equipment are in the premises.

The expected revenue of this business is $600,000.00 in the first year in the most optimistic scenario, $500,000.00 in the most probable scenario, and $400,000.00 in the most pessimistic scenario. The revenues are expected to grow at a rate of 10% per year for at least the next ten years.

The fixed costs are predicted to be about $600,000.00 in the first year and then dropping to $200,000 per year for the next foreseeable future. The other variable costs are estimated to be about $100,000.00 per year afterwards. Having all this information, the proposal, therefore, seeks financing for the establishment of the restaurant franchise.

Introduction

This proposal is submitted with the intention of sourcing for the financing of the acquisition of Papa John’s franchise. Papa John’s Pizza is a restaurant that has been in the business of making and distributing pizzas for the last two and half decades. Making pizza from better ingredients has been Papa John’s commitment since the first day of the opening of the first restaurant.

This has resulted in one of the best quality pizzas in the world. The brand has consequently grown to be the favorite among many consumers. As such, Papa John is seeking to expand the brand presence to possibly all the countries of the world. This franchise is intended to be opened in a small town of Glenwood springs, Colorado.

Currently, the town has no pizza outlet yet residents are great consumers of pizzas. The completion of this franchise acquisition will see the franchise acquiring the first mover advantage and take an estimated 90% of the pizza consumers in the city. This will go a long way in establishing a strong goodwill in among the town residents.

Customer Deliverables

Papa John’s pizza has a quality proposition to the customer: “making quality pizza using better ingredients.” This dedication to the quality of the product ensures that customers are attracted to the products of the company and subsequently, customer loyalty is gained. The customers can also expect a twenty four hour home delivery service. The customer is always the major focus in any profit making business.

This is because the customer consumes the products and without the customer, no company would exist. This realization of the importance of customers has compelled Papa John to have a mission that is customer focused.

The consumption of the pizzas from the restaurant will not only benefit the business owner but will also contribute to the social welfare of the Glenwood springs community. This is because the franchise has a “5% profit apportionment to the society” policy. This will, therefore, ensure that good external relations are created and maintained between the company and the community around it.

Project Objective statement

The main objective of this project is to open a Papa John’s franchise restaurant in Glenwood town, Colorado. This is aimed at capturing the consumer market in the town while delivering superior quality pizzas. The franchise will also offer employment opportunities for around one hundred people once it is fully operational.

Since this will be the first pizza delivering restaurant in town, the revenues are estimated with a high degree of accuracy. A recent market study indicates that an opening of a pizza restaurant in the town would certainly be a viable business venture with a success degree of 95%. The financing of this project would therefore ensure that the opportunity available in the market is exploited.

Franchise success criteria

Papa John’s franchise restaurant, being a private profit motivated business will have its success measured on a number of scales. The most important success scale is having a positive Net Present Value after the first five years upon which the project financing is sought.

Net Present value is a finance appraisal technique that discounts the future cash flows of a project (Don, Richard, Steve, & John, 2002). If the Net Present value is more than zero, the project is acceptable and its chances of success are higher than when it has been below zero.

The other success measure used to appraise the project is the projected revenues. The project needs to operate at least under the most probable scenario so as to ensure that the profits earned offset the costs incurred and having residual funds as profits. This is highly achieved by ensuring that operational measures put in place are adhered to as well as ensuring rigorous marketing activities.

The other success criteria used is the controllability of costs. The costs to be incurred by the project ought to be estimated with a high degree of accuracy. This will ensure that the chances of contingent expenses are reduced.

Costs play a major role in appraising the success of the project since the profits margins can be estimated with a high degree of certainty. As such, the estimated costs will offer insightful information about the success possibility of the business.

The final success criteria used is the adaptability to the environment. A business usually operates under two environments: internal and external. The internal environment includes all the factors that contribute to the organization’s service delivery. They include resources, both tangible and intangible, processes, structure and the organizational culture.

The internal environment is important in formulating business strategy since it consists of factors that are controllable by the management. The external environment consists of those remote factors which are outside the control of the company.

As such, the company must ensure it crafts its strategy that will ensure that it fits within the external environment (Geoff, 1996). Papa John’s restaurant will, therefore, be regarded successful in this regard if manages to take advantage of the opportunities presented while avoiding the threats that the environment presents.

Capital cost Estimates

The capital expenses for this project involves leasing building, equipments and other assets such as motor vehicles. The following table gives the breakdown of the fixed costs for the five years:

Cost estimation techniques

The cost estimation technique used in this project is the Method of Moments. This is a project costs estimation technique that expresses the different costs associated with the various cost items (Quentin & Joel, 2010). The advantage of this method of estimation is that the total project costs are assumed to follow a normal distribution based on central limit theorem.

The method is helpful in deriving the contingency from the normal distribution. This can be helpful in tracking the areas where costs were over incurred or under incurred (Quentin & Joel, 2010). This is useful in the future funding of the projects. Using this cost estimation the following table analyses the different cost items as a percentage of the total costs.

Cost Analysis

The above projects costs have been divided into two different classifications: fixed and variable costs. The fixed costs consist of lease, equipment, motor vehicle and contingent. The allocation of a total of $700,000 on lease for the five years comes from the need for premises that will not only host the restaurant but also the offices. The amount allocated for lease is 26% of the total project costs.

This is a desirable fraction of the total costs since building of a new plant or purchasing a building would push the costs high. The lease requirements state that the first year the amount needed will be $300,000 which will fall to $ 100,000.00 per year for the next five years.

Equipment takes up 11% of the total costs of the project. This is due to the various purchases of the new equipment for the restaurant in addition to the $ 50,000.00 worth of equipment given for free by the franchisor upon signing the agreement.

The equipment costs are justifiable since the company recovers the full amount spent on capital expenses through the capital tax allowances while submitting the income tax. Motor vehicles will be used as the premium means of transport for both the raw materials and the products. The initial costs will, therefore, be $150,000.00 and then drop to $25,000.00 per year for the next four years.

An analysis of the variable costs indicates that the project’s variable costs majorly consist of salaries, cost of goods sold, and administrative expenses. These expenses are, therefore, justifiable since they are pegged on the projected output for the five years. The largest percentages of costs come from the cost of goods sold. This comes from the purchases and the support activities that bring the product to a consumable state.

Cost Assumptions

Cost assumption is an important aspect of any cost estimation report. It helps understand the rationale under which the costs were arrived at. Cost estimation also gives a clear interpretation of how the costs were arrived at during the preparation of the projects costs (Nicholas & Herman, 2008). There are different cost assumptions that exist for different cost scenarios.

The most common cost assumptions are that the costs always follow a linear format. This is an assumption that seeks to streamline the change in the costs over the different periods under which the project is to be appraised. In the Papa John’s restaurant franchise financing proposal, there are several cost assumptions that have led to the nature of cost estimates.

The first assumption is that the costs will follow a linear distribution over the five years provided. This assumption typically means that over the next five years the costs are expected to remain unchanged.

This assumption, however, has several limitations including the fact that in real practice, costs cannot be the same over different periods. This is because of the different market conditions that require firms to spend on the unseen up-comings. This weakness is, however, catered for by the provision of the contingency costs which come under others.

The next cost assumption is that the fixed costs will remain the same for the different cost items over the five years. This assumption helps in having a consistent cash flow that can easily be appraised. This assumption is, therefore, a desirable assumption since it helps in having visual appraisal of the projects without having the need of doing extensive detailed report.

There is an assumption that the salaries will remain constant over the next five years. This assumption, therefore, means that the employees will either receive constant pay for the five year period without the possibility of salaries additions or the work force may be reduced as the business gets less labor-intensive thus reducing the number of workers and increasing their pay.

Project Appraisal

Project appraisal is a financial activity that is carried to evaluate the feasibility of an intended project (Linn, 1981). The most common methods of project appraisals are the discounted cash flows methods which include the Net Present value (NPV), the IRR, and the profitability index.

The method used in this case in the Net Present Value. This method is used in all three possible scenarios: the optimistic, the most probable and the pessimistic.

Net present value (the most optimistic)

Here the Net present value of the project is positive and therefore the project acceptable.

Net Present Value (most probable scenario)

The most probable scenario results in a positive NPV as well. This is, however, less than that of the most optimistic scenario.

Net Present Value (the pessimistic scenario)

The scenario above shows the expected outcome if the franchise fails in the market. This shows a negative net present value of $ -335,136.00. This scenario shows that if the expected revenues turn out as indicated, the project is not feasible.

However, the project has a positive NPV from the most probable scenario and should, therefore, be considered for acceptance. In appraising the above project, the cost of capital is set at 12%. This is because it is the required rate of return that money lenders are willing to earn as return to their cash lent out or invested. This discounting rate has been used in all possible scenarios.

Project Schedule

The project is divided into two stages: the pre-take off stake and the business stage. The first stage indicates the resources and inputs needed to ensure that the restaurant starts up while the second stage shows the timelines set for the restaurant to become fully operational.

References

Don, D., Richard, I., Steve, H., & John, H. (2002). Capital Budgeting: Financial Appraisal of Investment Projects. Cambridge: Cambridge University Press.

Geoff, R. (1996). Programme Management Demystified: Managing Multiple Projects Successfully. London: E & FN Spon.

Linn, C. S. (1981). The Implementation of Project Management: The Professional’s Handbook. Los Angeles: Addison-Wesley.

Nicholas, J. M., & Herman, S. (2008). Project Management for Business, Engineering, and Technology Principles and Practice. Amsterdam: Elseivier Butterworth-Heinemann.

Quentin, W. F., & Joel, H. K. (2010). Earned Value Project Management. London: Project Management Insitute.

Introduction

Franchising refers to the practice of using a business model success to capture new and retain the existing market shares. It can also be defined as a strategy that a business can use in retaining and expanding its customer base.

Franchising has enabled several businesses that were opened in the past to grow to whole new levels of profitability and customer satisfaction. Mary Anne and Mark have been able to develop a unique twist to their sauce. This as a result has made them realize constant growth of customers in a steady positive way (FreeAdvice Staff n.d.).

Within a period of five years they were able to open up a second restaurant. Unfortunately, Mary has not been able to make enough sauce that would meet the rising demand. Franchising would be the best way to support their business to meet growing demands. In addition, it would also provide a way of raising more capital to expand into other regions.

Through the private investors they were able to raise $ 1 million to acquire and create more franchise systems. They were also able to meet all the regulatory requirements and the marketing finances for the franchise. In franchising their business they would apply the strategy described below.

Steps to take in franchising business. Acquisition of a license and use in legal business

As defined by the international franchise association (IFA), franchising involves an agreement between two parties. This agreement would enable the franchise owners to market the products as their own or use the trademark registered for commercial purposes. Since they have been receiving request to purchase franchises, it would be wise for them to obtain a license agreement that would enable them to trade with the trademarks acquired.

The license would also enable them market their products using other registered trademarks without being seen as operating illegally. This process has enabled the Beauchamp’s buy and sells several franchises between $300,000 and $500,000. Mark is also planning to open up a state of the art franchise system that would be operating under the company’s trademark (Web Editor, Manager Advertising & Marketing at PIPERS n.d.).

Common Development Strategy and Improvement of Growth of the Franchise

Mark and Mary Anne have involved themselves in acquiring and disposing of franchises. Mark and Mary Anne need to develop common engagements on development and improvement strategy of the franchise business. Information such as the audited financial statements, a description of the team management for the business and its experience are required.

Hence a need for hiring a professional franchise consultant. This needs mutual trust and respect and a sharing of the general aims and targets of the contract. The main objective of this approach would be that both parties would benefit from the common goals and objectives of the company.

The franchisor is also required to provide support to the franchisee. This will involve encouraging the systems of operation. The franchisor should also follow the practice guidelines and pay the maintenance fees such as marketing and the ongoing management expenses as a franchisor, taste of Yam needs to hire staff that will focus solely on helping franchise to grow to its projected growth level (Definition of Franchising n.d.).

References

Definition of Franchising n.d. Web.

FreeAdvice Staff n.d., What is a franchise business? Web.

Scarborough, NM 2011, Management: Small Business, 10^th edn, Prentice Hall, New York.

Web Editor, Manager Advertising & Marketing at PIPERS n.d., Franchising & Licensing – What are they? and how can you benefit from them? Web.

The safety of workers in the workplace is becoming an important aspect of business. In recent years, the number of employees suing their former employers has been increasing. Many workers sue their former employers for workplace injuries accruing over time. Unlike accidents, the impact of long-term exposure to bad working conditions is difficult to prove.

This is because an employer can argue that the employee had an underlying condition, or that the employee condition occurs to many regardless of working conditions. The best way for lawyers on both sides to determine the truth in regards to long-term injuries is by carrying out an ergonomic analysis of the working environment of an employee.

This paper presents the findings and recommendations of an ergonomics analysis carried out at Cafes in Canada. The goal of the analysis was to determine whether the working conditions in the fast food restaurants are safe for workers. The specific systems investigated in the exercise were the service lines.

Background

Tim Horton’s Café began operations in 1964, taking the name of one of the founders, who was a Canadian Hockey player. The company opened several branches in Canada, and later started licensing franchises across Canada and the United States. The franchise agreements did not include any standards regarding work practices the cafés.

The result is that each store has variable staff safety standards. The danger with this is that Tim Horton cafés with poor ergonomic practices can destroy the reputation of he Horton Brand, leading to loss of business across North America. In addition, the company will find itself with many cases in court relating to workplace injuries suffered from long-term exposure to poor working conditions.

Structure of the Report

This paper has four main sections. The first section looks at the ergonomic problems of workplace design and work practices. It identifies the problems with the workplace design of Tim Horton’s Cafés. The second section deals with an assessment of these problems. The assessment will analyze various facet of the working environment at the Café. The third section presents the result of the analysis and the final sections identifies redesign consideration that the café needs to make.

Problem Identification

The main area of interest in this project was the safety of the staff working inside any of the Tim Horton’s Café Franchises in Canada. The staff is very vulnerable to low intensity strain that may accrue into long-term injuries. They do repetitive jobs that involve carrying various loads and using certain postures repeatedly. As pointed out earlier, the concerns identified relate to the long-term impact of repeated exposure to some of the tasks associated with their jobs

Any Tim Horton’s Café Franchise has a manager, waiters, cashiers, and chefs. The actual number of employees in each café depends on the proprietor. The specific members of staff this analysis focused on were the waiters. Their main job is to take client orders and to fill them. The service model used in Tim Horton’s Café’s is predominantly, self-service. The clients buy food from a counters and goes with the food to the eating area. The waiters work is behind the counter, taking the orders and filling them.

The tasks a waiter handles are a follows. First, the waiter receives a receipt from the client across the counter. Secondly, the waiter studies the receipt and places it in a receipt box. The waiter then picks the appropriate packaging for the food items required by the client. Thirdly, the waiter picks the food, and packs it. Finally, the waiters place the food on a tray, and hands it back to the client.

In many stores, food such as donuts, cakes and pastries are on display racks under the counter. The waiter simply picks the food and packs it. In some cases, the waiter must make an order by asking the kitchen staff to prepare a food item. This is common with burgers and sand witches. The kitchen staff prepares the food items and hands them over to the waiter, who then packs them and hands them over to clients across the counter.

The waiters have several pieces of equipment at their disposal when handling their duties. First, they have microwave ovens for heating food quickly. Secondly, they have juice dispensers for fresh juices. Thirdly, the waiters use touch-screen pads to place orders to the kitchen for food items that are not in the display racks at the counter.

The major risks that waiters face while working at Tim Horton’s Café include lower back strain, ankle injuries, and neck injuries. These risks come from the constant bending, turning, and movement of hands while serving customers. The movements a waiter makes between studying a receipt and packing food involves turning, and bending.

Repeated turning can put pressure on the ankle joints and the knees. The bending and long hours of standing can lead to back pains. In addition, the constant crouching to pick up food items at the lower shelves of the display counter can also lead to neck pains. This means that the main design principles needed to address these concerns should be those that solve problems associated with repeated stress on the back, ankles and knees, and the neck.

Assessment

The focus of this project was to explore different ways of making the work of the waiters more convenient using ergonomic principles. This called for an in depth analysis of the tasks and the work done by the waiters. During the process of problems identification, it was possible to identify the main tasks carried out by a waiter behind the counter. This section deals with an in-depth assessment of these tasks about potential bodily injuries.

Procedure

The three main methods used to gather information about the operations at Tim Horton’s Café were as follows. First, observation proved very useful in determining how the food service process works at Tim Horton’s Café. Secondly, interviews with staff proves useful in finding out what their view were regarding the working conditions.

They were simple interview simply aiming at finding out what they felt were the biggest challenges associated with their work. The third method was an online review of the view of former Tim Horton’s employees on glassdoor.com. The reviews used in the analysis were all from the month of November 2013.

Findings

The observations took place for a period of two hours on a Saturday evening. This is one of the peak times for the café. The waiters were aware of the process. The objectives of the process were as follows. First, it was important to develop metrics for use in carrying out ergonomic analysis of the working conditions in the café.

Secondly, the process sought to identify the challenges of working as a waiter in a Tim Horton’s Café of relevance to ergonomics. Thirdly, the observation exercise aimed at finding out how often the cashiers took breaks, and any signs of agitation by clients based on customer service.

The main observations made in regards to the time spent on various tasks were as follows. On average, it took a waiter 45 seconds to fill an order. The sizes of orders varied from a single cup of coffee to trays of assorted snacks. Serving single items was the quickest for of service. It took longer to prepare sandwiches and burgers. The second observation was that a waiter bends or squats at least twice every five minutes.

The main reason for this is the design of the display shelves. If a client ordered something in the shelves, the waiters had to bend or squat to reach it. The third main observation was that the waiters made a 360-degree turn (or equivalent) at least once every five minutes.

This usually occurred when clients ordered food that was not in the display shelves. The waiter had to turn to the kitchen window and place the order. Finally, the observations revealed that accessing packaging material broke the serving routine whenever a waiter needed to open a new batch of packaging materials.

The interviews with the waiters were very brief. They took place just before the waiters left their stations at the end of their shifts. Three waiters were interviewed. The waiters were asked to respond to three questions. The three questions were as follows.

1. What are the most challenging aspects of your job?
2. Are suffering from any recurrent bodily pain that you associate with this job?
3. What changes would you like to see in your working conditions?

The answers to the first question were as follows. First, the waiters said that the most challenging aspect of their job was standing for long hours. A normal shift lasted for eight hours. Each of their shifts had at least one peak time. The peak time for the morning shift was between 12.00 pm and 2.00 pm, which coincides with lunch hour.

The second peak time was between 5.30 pm to 8.00 pm. During those hours, the waiter said that they have to work on their feet with barely any time to rest. For the slower hours, it is possible to take breaks. However, as long as the waiter is behind the counter, the waiter must remain standing.

The design of the area did not anticipate the need for sitting. Secondly, the waiters all reported that they had minor back pain and inflammation of their soles. They also said that they frequently suffer from headaches and dizziness at the end of their shifts, depending on how stressful the day was. When asked about the changes they would like to see in the workplace to make their working environment more pleasant, they said that they would like to have comfortable resting chairs for use during the slow hours of the day.

The third aspect of the assessment of the working conditions at the Tim Horton’s Café was an online review using glassdoor.com. Glassdoor.com is a website that collects reviews from former employees on the working conditions of the companies they worked in. So far, glassdoor.com has over 280 reviews from former Tim Horton’s Café employees.

The review undertaken for this project used the employee reviews posted in the month of November 2013. The format of the data available from glassdoor.com include the duration the reviewer worked at the company, the position they held in the company, and the pros and cons of working for the company. They review also allows former employees to indicate whether they would recommend the company to a friend, and to offer any advice to the senior management.

The results obtained that are relevant to ergonomics were as follows. First, the reviewers felt that the best part of working in a Tim Horton’s Café was that it gave someone an opportunity to meet many people, learn about customer service, and grow under the supervision of the managers. On the list of cons, the highest rated negative experience was standing for long hours. Three out of the ten reviewers singled this as their worst experience. Table 1 below shows the cons given by employees to glassdoor.com.

One of the main observations from this review was that standing for long- hours was a source of concern for two employees. These two employees both worked as cashiers in the company. The rest worked in other department. The rest of the issues show that there is a morale problem in the company. Many employees feel that they pay is too low, and that the environment is too stressful. Stress can lead to accidents in the workplace. Too much tension can also affect the quality of customer care in the café.

Results

The analyses of the findings made above are as follows.

Task Analysis

The tasks a waiter performs when serving clients are as follows

1. Receiving receipt from cashier.
2. Studying receipt and placing it in receipt box (Order confirmation).
3. If food needs preparation, placing order to the kitchen.
4. Picking packaging material.
5. Picking food item or/and.
6. Pouring drinks.
7. Placing food items in tray.
8. Handing over the food to client.

These a waiter must complete at least six of the eight tasks listed. The options available arise of the waiter does not need to order a food item from the kitchen, and whether not the client want both food and drinks.

The analysis of the tasks carried out by the waiters revealed several things. The tasks that require the most physical exertion are tasks iv-vii. The previous one do not require much movement in the service area. The first significant task from an ergonomic point of view is the picking of packaging materials.

Every order made must be packed for the client. This means that each time a client makes an order the waiter must make this motion before proceeding to the next step. The implication of this task is that minor changes in the position of the packaging materials can result in significant changes in the working conditions of the waiter. It is imperative to ensure that the packing materials are at a comfortable height for each waiter.

The second task of interest from an ergonomic perspective is the picking of food items, either from the kitchen, or from the display shelves. This activity is also repeated severally making it a significant source of strain for the waiters.

The third point arising from the analysis of the tasks taking place at the counter is that the waiters make circular motions if the food items ordered are not inside the display shelf in front of the waiter. These circular motions can lead to lateral strain in the ankles especially of the waiter turns in the same direction each time.

The final task of interest is placing food items in the tray. While the waiters do this for only a short period, it represents the time when they carry peak lead as they hand it over to the customer, Depending on the size of the order, the weight of the tray can range from 0.5 kg to 4 kg. This is very significant because repeated loading can led to strain and back injury.

Diagram 1 below shows a waiter in a Tim Horton’s Café serving coffee. The layout of this store is such that the waiter must turn 180-degrees to pick food items placed on the display shelf behind the counter. If a waiter turns in the same direction each time there is an order, they may end up with ankle injuries, or sprains. The second picture shows a young customer squatting to take a closer look at the snacks in the display shelf. A waiter may also need to squat to pick the items in the lower shelves of the display shelf.

NIOSH Equation

The movement that are relevant to the calculation of the NIOSH equation include the movement from the counter to pick packaging materials, and the bending motion needed to pick food items located at the bottom of the display shelf. The display shelf has a number of levels.

This makes it more demanding to pick items at the bottom shelf as opposed t items in the higher trays. The measurements taken at the cafeteria showed that the waiters must bend an average of two times every five minutes. The significant measurements needed to find the NIOSH values are given in the table below

Table 3: NIOSH Parameters.

RWL = 23 * 0.5 * 0.955 * 0.895 * 0.856 * 0.81 * 1 = 6.82 kg

Design Recommendations

The analysis presented above opens the way for certain design choices the management of Horton needs to consider. The current design of the workplace can result in long-term injuries. The design choices in questions should help reduce the stress placed in the backs and ankles of the waiters based on the repeat motions they make behind the counter. The design choices are as follows.

First, the management of the café needs to consider placing stool behind the counters for waiters to use as they rest. The current design assumes that the waiters do not needs a place to sit because they spend the whole day behind the counter. This assumption is not correct. Waiters spend a lot of time standing waiting for customers during the off-peak hours. The situation is very different during the Peak hours.

In this regard, the management can help to reduce the strain associated with standing for long hours by giving the waiter stools to sit on when the number of customers is low. The type of stool chosen for this task should meet the following criteria. First, it should be high enough for the waiter to sit on it without climbing or first squatting. a situation where the waiter must rise or squat to reach the seat may be counterproductive.

This is because repeating this motion many times will only introduce new stress areas. The best solution it to use a height adjustable stool. This will ensure that each waiter can adjust it to a comfortable height. Secondly, the stool should have a backrest, to promote a good sitting posture. Poor sitting postures on stools without backrest can lead to back problems. Thirdly, the stool should be able to swivel. This will make it easier to mount and to dismount from the nearest direction.

The second element that the management needs to consider is the type of shoes the waiters wear to work. Shoes play a very important role in the way the body distributes loading stresses. One of the reason flat shoes are recommended for pregnant women is that they help them to keep a good posture while walking.

This reduces the strain on their backs. Waiters spend very many hours on their feet. This means that one the factors that contribute towards their comfort at work is the type of shoes they wear. In this regard, the management of Tim Horton’s Café should consider introducing a strict policy on the shoes waiters should wear to work. The recommended type of shoes is flat shoes with soft interiors, but with firm rubber soles. a shoe with soft interiors will reduce the pain arising from pressure points associated with tough interiors.

The soft interiors will spread the weight of the wearer across the soles of the feet. This reduces the risk of injury to bones in the feet. Tough rubber exteriors are also very important for two reasons. First, the exteriors should not bulge under the weight of the waiter because that will lead to stress on the ankle joint. Secondly, rubber soles have good grip. This will eliminate the possibility of slipping. In effect, it will eliminate the risk of dislocation while walking in the café.

The third design consideration that the management should make is rearranging the display shelves to reduce the number of times a waiter must bend to pick out items chosen by customers. Several options exist in this regard. The first option is to use a static display shelf for displays, and them to put all the food items in counters, which waiters can reach without bending or squatting. This will eliminate the need to bend.

The second option is to determine the position of the food items based in the demand. An analysis of the sale records will reveal the fastest moving items in the café. These items should be in the highest shelves to reduce the frequency of bending to pick food items. The third option is to eliminate the display shelves all together and find higher shelves for the food items. This will be the most costly option among the ones under consideration.

It will require the café to reconstruct its entire counter area. The fourth option would be to use a display shelf that has a conveyer system for lifting food items from the lower shelves to a comfortable height. This option retains the display shelf and all its advantages, and them provides a means of accessing items on the lower shelves while eliminating the need to bend or squat.

The fourth redesign option the management needs to consider relates to the placement of the packaging materials. Our analysis showed that the waiters handled the materials in a way that they found convenient. Some of them picked the materials one by one as needed, while some picked several packages and places them conveniently on the countertop.

From this observation, the management should consider aprons designed to hold a limited quantity of packaging materials that can serve about thirty customers. The tradeoff in this case will be between the quantities of packaging materials an apron can hold versus the weight of materials. The advantage that such as apron will provide it that it will eliminate the motions associates with reaching for the packaging materials. This is the most consistent motion the waiters make. Therefore, eliminating it will result in a reduction in long-term injuries.

The second advantage of such as apron is that it will eliminate the challenge of using a common height as a parameter. The counter tops have a fixed height. This height is not ideal for all the waiters, whose heights can vary by up to two feet. The apron will ensure that each waiter has the packaging materials at a convenient height. A variation of this idea is to use a belt like the one technicians use for their tools to hold the packaging materials.

Budget

The cost these measures are presented in the table below.

Table 4: Implementation Cost of Ergonomic measures.

While this report concentrated on the impact of the physical working environment, it is important to note that the motivation of employees also plays a role in the safety of the workplace. This means that Tim Horton’s Café needs to address the other issues such as poor remuneration and feelings of boredom at work. These are leading causes of accidents in many companies. The total cost of implanting the measures proposed will vary depending on the specific measures chosen by the company.

References

Clute, B. (2012). An Eye on Ergonomics. Automotive Design & Production , 42-43.

Glassdoor. (2013). Tim Horton’s Reviews. Web.

Mallon, J. (2012). Don’t Just Manage Musculoskeletal Disorders, Drive Performance through Ergonomics. EHS Today , 55-57.

Middlesworth, M. (2013). A Step by Step Guide to Using the NIOSH Lifting Equation for Single Tasks. Web.

Walters, D., Frick, K., & Johnstone, R. (2011). Regulation Workplace Risks: A Comparative Study of Inspection Regimes in Times of Change. Cheltenham: Edward Elgar Publishing.

Introduction

The main purpose of this management plan is to maintain financial stability of the firm. In every organization, there is need to have a clear management plan since it is necessary in providing the guidelines on how to maintain financial stability.

This team is financially stable and it therefore needs a clear management plan at this initial stage to enable it to retain the said stability. This plan will enhance the team success by keeping the team’s activities in line with its goals and mission. The plan will guide the actions of the team and this will significantly help (the team) in meeting its goals.

Mission Statement

This plan will guide and promote team’s success by identifying a guideline on leadership styles, player and business needs, conflict resolution strategy and evaluation plan that is necessary in enhancing the group in meeting its goals and maintaining financial stability.

Management Strategy

The aim of this management strategy is to enhance the survival of the team. It helps in responding appropriately in different challenges which may arise from different circumstances. Without a good management strategy, a group’s financial well being rarely reflects its potential (Anonymous, 2006, par1). This plan is therefore important for the organization.

Management Factors

There are several management factors that will be necessary for quality management. As the mission of this team shows, the team aims at maintaining its financial stability as it struggle towards realization of its goals. The following management factors will be necessary to the team in realizing its goals;

Top Management Support

This is a vital factor in quality management. According to Kanapathy (not dated), the top management has a major role to play in enhancing the team’s commitment towards quality improvement (p. 5). In other words, there is need for the top management to actively participate in every team’s activity.

They have the responsibility of encouraging every member in the group to work towards realization of the team’s goals. For instance, if every top manager is practicing activities that promote the team’s goal to maintain its economic stability, then in the process a culture will develop and will help the company in maintaining its economic stability.

Employee Training

Employee training in every organization has a significant role in improving the productivity of the workers. By training employees, the team will be able retain its financial stability since it will be able to maximize the labor resources. Training also plays a major role in promoting the success of the quality management systems in a firm.

Quality Information Availability

According to Kanapathy (not dated), a proper flow of information in any organization significantly affects the performance of any organization (p. 2). There is a need for every stakeholder to receive accurate information and in the right time. For instance, every investor must be informed of every team’s activity in the right time so that they may act accordingly.

When hiring new players, every investor must be informed before any transaction is done. Each stakeholder must also be given an opportunity to give their views on every issue touching them.

Players must also be able to access quality information from the top management team at the right time. On the other hand, players should also provide the top management with pertinent quality information so that every person is informed on every activity going around the project.

Quality Information Usage

After receiving quality information, every stakeholder should be able to utilize it in the right manner. Otherwise this information may not be effective to the organization. It is only through effective use that this information will lead to quality improvement in an organization. In other words, every stakeholder must have the ability to act timely on the information received. By so doing, the organization will be able to realize its goals.

Members Involvement

Member’s involvement implies that each member in the team should be empowered to provide information on issues touching the team’s activities. Stake holders in the team must actively participate in the decision making process at all stages. It is advisable for the top management to ensure that the team players are provided with the knowledge and resources so that they can fulfill their responsibilities appropriately.

Leadership Style

In every organization, leadership style is vital in determining the success of an organization. There are five styles which an organization can adopt in order to meet its goals and objectives. These include autocratic, leissez faire, democratic and bureaucratic leadership styles (Anonymous, Leadership styles, p.16). In this case, the best leadership style is the democratic leadership.

Rationale

Democratic leadership style will help the organization in realizing its goals. This leadership style will encourage the participation of the members in decision making. It also keeps every stakeholder informed about every decision that affects them and gives them a chance to contribute in solving any problem that arises. This leadership style will therefore help the team in realizing its goals.

Group Organization

Business Needs

The business needs are based on the mission and goals of the organization. The main business need is to maximize profits and minimize its costs. The business also needs to maintain its financial stability through application of the best management practices.

Rationale: The business requires every participant to work towards the achievement of the team’s success. It therefore requires every player to execute their roles perfectly in order to avoid any drawback. This will involve adoption of the most effective courses of actions.

Player Needs

The player is a very important part of this organization. There is need to consider his needs so that he can be motivated to work hard towards the achievement of the team’s goals.

Players must be given an opportunity to give their views in decision making. This will make them feel comfortable as members of the organization. As Koster (2000) puts it, every player must be given a chance to live their free life (p.2). In other words, players need to have the freedom to live their lives the way they want outside the playing career.

Players need to receive a fair salary from the organization. A pay of $ 400,000 is recommended as a starting salary for the players. This will be feasible depending on the organization’s financial status.

Rationale: In 2009, the average salary for NFL player was approximately $770,000 (Mehta, 2010, p.4). This was a salary for a full time player. The quoted salary will therefore be feasible for a part time player. The salaries may also differ depending on the duration of the player in the team.

Conflict Resolution

Business Issue

One of the main business issues that may lead to conflict is fund management. Fund management conflict is likely to occur between the investors and the management team. As Haslem (2009) puts it, there is need to consider the issue of conflict of interests in investment (p. 21).

Resolution Plan: In order to solve this problem, the management team must ensure that all the members are consulted before making critical business transactions. In case of differing views, this must be settled before moving to the next step.

Player Issues

The main issue which can arise is conflict between players and misunderstandings. This can adversely affect the performance of the team. In order for the team to meet its goals, it has to work together as one since the success of the team can never be met individually. Each member heavily relies on each other in different ways. In other words, conflict among the players can hinder the organization from meeting its goals.

Resolution Plan: In most cases, a conflict among employees arises from their roles in the team. In order to maintain a good relationship among players, there is a need to specify clearly the role of each. This will reduce friction, which occurs on sharing of roles.

Evaluation Plan

Implementation evaluation

1. Is the team performing the planned activities as planned?
2. Are the team’s activities directing the organization towards its mission?
3. How do the players view the team’s activities?

Outcomes Evaluation

1. Is the team cultivating attention from the audience to enhance its fame?
2. Are the players satisfied with the team’s activities?
3. Are the people affected by the activities of the team satisfied?
4. Which factors have hindered or favored you in your effort to execute program activities?

Reference List

Anonymous (2006). What Is Management Strategy? Web.

Anonymous. Leadership Styles. Web.

Haslem, J. (2009). Mutual Funds: Portfolio Structures, Analysis, Management, and Stewardship. New Jersey: John Wiley and Sons.

Kanapathy, K. Critical Factors of Quality Management. Web.

Koster, R. (2000). Declaring the Rights of Players. Web.

Mehta, S. (2010). NFL Player Salaries. Web.

Property Description

Zermatt area has many magnificent hotels that are family owned and does not have enough space for accommodation of long staying tourists. The proposed residential apartments within Zermatt are likely to boost the number of tourists visiting these exotic sites.

The Peak by Four Seasons apartments will offer accommodation to visitors of the hotels in Zermatt. This project will ensure that targeted clients will enjoy the best services within the location of their preferred hotels within Zermatt since the residential units will be constructed within the Zermatt location.

Facilities

The residential resort has facilities such as free Digital TV – Apple TV, B&O Television Sets in all living rooms and bedrooms, Blue Ray and DVD disc Library, private cinema room, high speed villain in all apartments and lobby, apple computers in the apartments and laptop PCsare available upon request, library and open fireplace, ski room and heated lockers, internal elevators, ski in and out facilities, breathtaking views on the Matterhorn and the surrounding peaks from all balconies, fireplaces, geothermal heatingand direct access via private tunnel and elevators.

Besides, the recreational services include an indoor and outdoor pool usable 24/7, wellness area with sauna, flower steam bath, caldarium, large rainfall showers, sundeck, massage and beauty treatment available upon reservation, and large state-of-the-art fitness center.

Franchised Services

The Peak by Four Seasons residential units will franchise the beverage services to hotels such as Mont Cervin Palace, Riffelalp Resort, and the Omnia hotel.

Included in the Peak by Four Seasons franchise investment are:

• Beverage services
• Culinary equipment/Furniture
• Personal effects such as towels, dishes, and toiletry
• Marketing the Peak by Four Seasons by these hotels

Housekeeping and Inventory Systems

The Peak by Four Seasons provides basic services in housekeeping for all its clients despite the size or the cost of these residential units. These services are of quality and in line with the health regulatory standards in Zermatt (Harrison & St. John 2010; Janus 2008). The in house housekeeping inventory system controls all these services (Williams 2007).

Reservation Systems

The Peak by Four Seasons uses the Computer Reservation System (CRS) program to store information its intangible and tangible assets. Besides, the system is critical in eliminating the physical gap that might exist between the franchises and customers (Schneider, Chung & Yusko1993; UNWTO 2009; Weitzner & Darroch 2010). To put in place this system, we intend to incorporate KeepMeBooked, and Olxbooker for international and local clients.

Olxbooker System

Olxbooker software is essential in making a specific reservation especially for a long period of stay. The system handles payments made in advance and cash payments.In addition, this software provides an online module that downloads reservation requests from the website directly to reception with a thirty day trial. The complete package goes for 900 USD per month.

KeepMeBooked System

KeepMeBooked is moderately priced web-based software designed for business such asapartment residential. The software does the same function as the Olxbooker though it costs five dollars for each room within the residential unit. It also comes with free thirty day trial. However, its functions are limited to cash reception.

After comprehensive research, the Peak by Four Seasons adopted Olxbooker since it is more reliable and is affordable in the long run.

Investment in Technology

The Peak by Four Seasons being a global-born business, it is our priority to start gathering data to increase our knowledge management and capabilities. Technology integrated management will play an important role in the Peak by Four Seasons operations and strategies.

Technologies today are successful in improving customer value, internal business processes, internal growth and learning, sustaining a competitive advantage, and improving the long-term financial standing of a company (Kaynak 2003; Kew & Stedwick 2005).Thus, we intend to invest in the following technology.

Customer Value and CRM

The Peak by Four Seasons offers guests a range of technology, including wifi capabilities, automatic key cards, and a high-tech hassle free online reservation system. In order to minimize costs, the company will utilize the free system offered by Google Analytics program in offering CRM services.

Competitive Advantage

The capability of the Peak by Four Seasons to periodically collect data will ensure that it remains competitive in the market.

Internal Business process

Information sharing in the Peak by Four Seasons project is significant in improving efficiencies and effectiveness.Thus, sharing information within the departments of the Peak by Four Seasons is anticipatedto help the business to adapt to the Zermatt’s business environment.

Internal growth

Olxbooker system can create and manage standardization throughout the organization (Evans & Collier 2009).Thus, the Peak by Four Seasons seeks to introduce this system to manage critical information about clients and communicate with its departments. Since this computerized system is accurate in revenue collection, the Peak by Four Seasons will incur minimal losses in revenue collection.

Financial Aspect

Olxbooker will remain important in the billing, payroll, procurement, and HR departments of the Peak by Four Seasons project hence reducing the cost of operating the business.

Human Resources

The Peak by Four Seasons will function as a Limited Liability Company (LLC), but purges the need for corporate maintenance.

Labor Laws

According to the Zermatt’s legislations, employee and employer relations are managed by the following regulations (Peng 2009; Murphy 2010).

• Legal limit of regular working hours: 8 hours per day or 44 hours per week unless there is a written agreement between the employer and employee
• Vacation: Within twelve months of work, employees are entitled to a paid one month leave from work.
• Overtime Pay: Employees in Zermatt are entitled to overtime pay of at least 50% of the hourly rate

Personnel

In order to maintain a community oriented establishment, all front-line personnel will be indigenous to the Zermatt’s culture. All employees will be carefully selected, with qualifications including experience in tourism and hospitality and keen understanding of the Zermatt’s culture (Armstrong 2006).

Due to the type of establishment, we find it necessary to employ accounting or human resource personnel in addition to a general manager who will encompass the knowledge and capabilities to manage the necessary functions (Beardwell & Claydon 2007; Corporate Watch UK 2003).

The teams of the residences are full time employees groomed following the four seasons’ philosophy. The team comprises of a residence manager and 6 concierges, a front office manager, two drivers, an executive housekeeper, twelve housekeepers, a chef de cuisine, a sous chef, three chefs theparty, and atechnician. The outsourced staff will include a ski instructor, baby-sitters, and massage service providers.

Job Descriptions

General Management-Work Activities:

• Promoting and marketing
• Planning and organizing accommodations
• Setting targets for the business
• Financial planning and recruitment of staff

General Management-Job Requirements:

• University degree
• Language skills: Fluent in English and the local language
• University degree
• Five years experience in senior management position
• Proficient with the latest CRM and Reservation systems

Reception-Work Activities:

• Registering and receiving guests
• Control advance bookings
• Collecting payments
• Controlling advance bookings
• Answer questions about facilities and amenities

Reception-Job Requirements:

• Fluent in local language and English
• Well organized and good at multitasking

Housekeeping/Maintenance-Work Activities:

• Laundry and general cleaning
• Disposing wastes and replacing household supplies

Housekeeping/Maintenance-Job Requirements:

• Physical and medical fitness
• Cleaning equipment usage knowledge

Salaries

The Peak by Four Seasonswill offer full-time employment opportunities. Employees in the Front-line will be paid 700UD per month consisting of 22 working days. Housekeeping and maintenance will receive 500UD per month.The chefs will be paid a salary of 1500UD per month. The drivers earn a salary of 700UD per month.

The technician will earn 900UD per month. However, the outsourced personnel’s salaries will be negotiable and will depend on the demands of the market(Blyton & Turnbull 2006; Burke & Cooper 2008).

Training Personnel and Data Keeping

Employees will be periodically trained on the modern services and systems in this business to remain competitive. Training programs will be tailored to fit the specific demands of the market.

Outsourcing

Outsourcing has benefits such as improved service for guests, reduced cost of labor, and minimized risk(Zhu, Hsu, & Lillie 2001). Outsourcing services for thePeak by Four Seasons is critical in filling the positions that may not attract local labor(Brink, Fruytier& Thunnissen 2012; Cole 2006; Knight & Cavusgil 2006). These positions include babysitters, ski instructor, and massage providers.

References

Armstrong, M. (2006). Strategic HRM: a guide to action. London: Kogan Page.

Beardwell, L., & Claydon, T. (2007). HRM: a contemporary perspective. London: FT/Prentice Hall.

Blyton, P., & Turnbull, P. (2006). TheDynamics of Employee Relations. California: Palgrave.

Brink, M., Fruytier, B., & Thunnissen, M. (2012). Talent management in academia: performance systems and HRM policies. Human Resource Management Journal, 22 (2), 201-223.

Burke, L., & Cooper, T. (2008). Building more effective organizations: HR management and performance in practice. California: Palgrave.

Cole, G. (2006). Personnel & HRM. London: Continuum.

Corporate Watch UK. (2003, April). PR and Government. Web.

Evans, J., & Collier, D. (2009). Om. Alabama: Cangage South-Western.

Harrison, J. & St. John, C. (2010).Foundations in strategic management. Ohio: South Western Cengage Learning.

Janus, P. (2008). Pro Performance Point Server 2007: Building Business Intelligence. Alabama: Press Intel.

Kaynak, H. (2003). The relationship between total quality management practices and their effects on firm performance. Journal of Operations Management, 21 (4), 405–435.

Kew, J., & Stedwick, J. (2005). Business Environment: Managing in a Strategic Context. London: CIPD.

Knight, G. A., & Cavusgil, S. T. (2006). Innovation, Organizational Capabilities and the Born-Global Firm. (T. Gale, Ed.) Journal Of International Business Studies, 124 (18).

Murphy, J. (2010). Organization theory and design. Hampshire:Cengage Learning EMEA.

Peng, M. W. (2009). Global Strategic Management. Southwestern: Cengage Learning.

Schneider, B., Chung, B., &Yusko, K. (1993). Service Climate for Service Quality. Current directions in Psychological Science, 12 (2), 197-200.

UNWTO. (2009). Tourism – an Economic and Social Phenomenon:World Tourism Organization. Web.

Weitzner, D., & Darroch, J. (2010). EBSCO. Journal of Business Ethics, 1 (3), 56-67.

Williams, C. (2007).Rethinking the future of business: directions and visions.New York: Palgrave.

Zhu, Z., Hsu, K., & Lillie, J. (2001). Outsourcing a strategic move: The process and ingredients for success. Management DecisionJournal, 4 (7), 45-55.

Introduction

Background to the study

Cox and Masson (2007, p.1054) define franchising as ‘contractual business relationships involving the franchisor and the franchisee, which operate as legally independent business entities’. Through such relationships, franchisees have the legal right to use the franchisors’ business name, products and services, blueprint, or specialised aspects in their trading process.

Cox and Masson (2007, p.1055) add that the ‘franchisor offers the franchisee the necessary support systems necessary to establish the business’. By 2010, the presence of franchises was evident in approximately 75% of all countries in the world (Truitt 2006).

Subsequently, franchises have significantly contributed to the economic growth of the global economy by stimulating the retail sector, creation of employment, and contribution to country’s Gross Domestic Product (GDP) (Stanworth, Stanworth, Watson, Purdy, & Heleas 2004).

Therefore, franchising is a proven business concept. Many investors are of the opinion that adopting the franchise format can improve the effectiveness with which an organisation maximises its profit as opposed to independent start-ups. The concept of franchising business has experienced significant challenges in different parts of the world.

For example, the number of franchises declined from 1100 to 1025 during the period ranging between 2008 and 2010 (Buchan 2013). Despite this aspect, a report by the Franchise Council of Australia indicates that the franchise format has played a remarkable role in the growth of small businesses in the country (Buchan 2013).

Problem statement

Despite the contribution of franchising in promoting businesses’ capability to achieve high profitability, this business format has come under intense criticism due to its standardisation concept. Previous franchising literature has cited the level of autonomy and independence associated with franchising as major concerns.

Tuunanen and Hyrsky (2001) argue that standardisation is one of the key components of franchising. This assertion means that business format franchising is based on the model of ‘cloning’, whereby a business deals with standardised products and services. Therefore, the products are sold under similar trademark or trade name.

Under the concept of standardisation, the franchisee is required to adhere to the operational parameters set by the franchisor (Hoy & Stanworth 2014). Some of the standards include trademark, suppliers of inputs, promotion methods, the nature of the product, and the trademarks to be adopted.

Consequently, according to Fock (2001, p.173), the ‘franchisees are not given the opportunity to incorporate their own initiative in the operation of the franchise’. For example, the franchisor cannot make decision on diverse operating procedures such as operating hours, pricing, hiring of employees, and business location.

Failure to comply with the contractual agreement is a major source of conflict between the franchisee and the franchisor. For example, the contract may require the franchisee to pay the franchisor based on sales revenue. This aspect might pose a challenge to the franchisees in their quest to maximise their profits, especially if the geographical area in which they operate is characterised by minimal growth.

Such geographical limitations may pressurize franchisee to diverge from the set operational standards. Cox and Masson (2007, p.1054) assert that geographical dispersion ‘exposes the chain to varied local market conditions that require adaptation to maximise performance’.

Adopting uniform operating procedures and standards such as franchising is an ineffective strategy in some geographical locations in businesses’ effort to maximise their sales revenue and net income.

Subsequently, franchising is experiencing a challenge arising from the franchisors’ demand to comply with the concept of standardisation and the franchisees need to adapt their business operations in accordance with the geographical market needs (Levy & Weitz 2007).

Rationale of the study

Franchising has gained significance in the global business environment. Subsequently, most entrepreneurs and practising managers are inclining towards integrating the concept of franchising in their strategic management processes. The prominence of the franchising business format has arisen from the recognition of its role in stimulating business growth.

However, entrepreneurs and business managers have an obligation to ensure that firms achieve their profit maximisation. This goal can only be achieved if the most effective business format is adopted. However, the concept of franchising has some gaps emanating from its overemphasis of the concept of standardisation as its cornerstone.

Research aims and objectives

The study aims at developing a comprehensive understanding on the importance of understanding the standardisation and adaptation concepts of franchising. In a bid to achieve this aim, the researcher will follow a number of objectives, which include

1. To assess how geographical factors affect the implementation of franchising business format.
2. To analyse the extent to which franchisors allow franchisees to adapt to the prevailing environmental conditions.
3. To evaluate the franchisees integrate the concept of adaptation in their effort to carry out the franchising system.

Research questions

A number of research questions based on the research objectives will guide the study. The research questions are outlined below.

1. What is the impact of geographical factors affecting the implementation of franchising business format?
2. To what degree do franchisors allow franchisees to adapt their businesses to the prevailing environmental conditions?
3. How does a franchisee integrate the concept of adaptation in their effort to establish the franchising system?

Significance of the study

This study will be of great significance to practising managers and academicians. For example, the study will provide business managers and entrepreneurs with insight on the challenges associated with the standardisation concept of franchising especially in business operating in diverse geographical areas.

Subsequently, business managers will be in a position to make a decision on whether to adopt standardisation or adaptation in their effort to achieve profit maximisation. Furthermore, the study will enable academicians to appreciate the gap associated with the concept of franchising in their review of the subject.

Research hypothesis

This study will aim at verifying the null hypothesis (H₀) or refuting the alternate (H₁) hypothesis, which include

1. Null hypothesis H_{0 –} Geographical pressures have a significant impact on franchisees decision to deviate from the standardisation concept of franchising and adapt to the prevailing environmental conditions.
2. Alternate hypothesis H_{1 –} Geographical pressures do not have an impact on franchisees decision to deviate from standardisation and adapting to the prevailing environmental conditions.

Literature review

Franchising

Entrepreneurs must make a decision on the legal structure that they will adopt in the course of establishing their business. Truitt (2006) argues that the format selected has significant tax, regulatory, legal, and business consequences. The choice of business format is determined by different factors such as capital requirements, liability risk involved, tax, and marketing requirements (Sorenson & Sorensen 2001).

Some business structures are characterised by high capital requirements, liability risk, and marketing requirements (Croonen & Brand 2012). The main types of business format in much legislation include partnerships, sole proprietorships, limited liability companies, and franchises. Buchan (2013, p.3) emphasises that franchising ‘has become a significant part of the global commercial landscape’.

Components of franchising formats

Dada (2013) asserts that the franchise business format is comprised of four main components, which include the nature of the product or service, format facilitators, system identifiers, and benefit communicators. Franchises specialise in offering customers unique products or service, which acts as its competitive niche.

On the other hand, benefit communicators refer to the intangible benefits associated with the product or service being offered. Examples of such benefits include high level of professionalism in the service delivery process and reliability.

Format facilitators refer to the procedures and policies that should be followed by the franchisee, while system identifiers refer to the visual elements that associate a firm or product to a particular chain, for example trademarks, uniforms and architectural features (Yudoko 2012).

Franchising; standardisation versus adaptation

Cox (2002) argues that standardisation is the foundation of franchising due to its contribution in the franchisees and franchisors’ efforts to achieve its cost minimisation objective. For example, standardisation minimises the cost incurred in monitoring the franchisee. Moreover, standardisation allows businesses to develop and maintain a unique brand image amongst its customers (Michael 2002).

Subsequently, an organisation nurtures a high degree of customer loyalty arising from trusting in the uniformity of the product’s quality across outlets in different locations. Therefore, standardisation in franchising enables entrepreneurs to sustain the unique customer experience.

Longenecker (2012) asserts that the franchisees’ efforts to deviate from the set standards by adapting their own operational procedures may lead to erosion of the benefits associated with franchising, for example due to a decline in product quality and loss of the brand image (Rundh 2003). Furthermore, critics argue that adaptation in franchising format may influence the franchisees’ ability to innovate adversely (Chary 2009).

This assertion arises from the view that the franchisee might not have sufficient knowledge to innovate the product or service offered in order to fit the geographical needs (Stanworth, Healeas & Purdy 2002). Cox and Masson (2007, p.1056) argue that adapting ‘to local conditions reduces the potential for cross-fertilisation of ideas for identifying and implementing new offerings’.

Despite the significance of standardisation, Megan (2010) argues that franchises operate in diverse geographical areas, which are characterised by different factors such as intensity of competition, customer tastes, and preferences. Therefore, the effectiveness of standardisation amongst franchisees operating in geographically diverse area is limited.

Michael (2000) argues that franchisees have substantial knowledge of their local geographical market compared to the franchisor. Consequently, the likelihood of succeeding in their innovation effort is high (Michael 2003).

Despite their commitment to standardisation, franchisors depend on the market knowledge and information gathered by franchisees in undertaking product or system innovation (Ryans, Grittith & While 2003). However, the need to maintain a strong brand image restricts franchisees from adapting their operations to the local market situation (Pizanti & Lerner 2003).

From the above review, a significant gap needs to be addressed on whether franchisors should give franchisees the opportunity to deviate from the set operational standards and procedures and adapting their operations to the prevailing market situations. Through adaptation, there is a high probability of franchising business formats gaining better significance compared to the prevailing situation.

Methodology

Research design

The purpose of this study is to explore the decision of franchisees to incorporate the standardisation versus the adaptation strategies in their operation. The study will adopt qualitative research design. The decision to adopt this research design is informed by the exploratory nature of the study.

Moreover, qualitative research design will provide the researcher with an opportunity to gather substantial amount of data to aid in making extensive and conclusive research findings. Maxwell (2005) further asserts that qualitative research design is a multi-method research strategy, which is interpretive in nature. Subsequently, the study will be of great significance to the target audience.

Data collection

The researcher will source data from secondary sources. The researcher will review previous studies and literature on standardisation and adaptation amongst franchises. Some of the main secondary sources of data that the researcher will consider include reports peer-reviewed journals and other literature. Numerous studies on franchising have been conducted previously.

Therefore, the use of secondary sources will provide the researcher with an opportunity to gather substantial data. However, the researcher will ensure that the secondary data selected is from credible sources. This move will improve the reliability of the data collected.

Data analysis and presentation

The data gathered will be analysed using Microsoft Excel, which will enable the researcher to condense the voluminous data collected. Creswell (2003) asserts that qualitative research design enables a researcher to gather diverse data. Evaluating the data collected can overwhelm the researcher if it is not condensed effectively.

By using Microsoft Excel, the researcher will be in a position to condense the data successfully by incorporating tables, graphs, range, and graphs. Subsequently, the researcher will assess different aspects associated with the subject under investigation.

Furthermore, using Microsoft Excel will provide the researcher with an opportunity to present the data effectively using graphs. Subsequently, the target audience will be in a position to understand the research findings easily.

Reference List

Buchan, J 2013, Franchisees as consumers; benchmarks, perspectives and consequences, Springer, New York.

Chary, S 2009, Production and operations management, Tata McGraw, New Delhi.

Cox, J 2002, Geographical dimensions of business format franchising, University of Southampton, Southampton.

Cox, J & Masson, C 2007, ‘Standardisation versus adaptation; geographical pressures to deviate from franchise formats’, The Service Industries Journal, vol. 27 no. 8, pp. 1053-1072.

Creswell, J 2003, Research design: qualitative, quantitative and mixed method Approaches, Sage Publications, New York.

Croonen, E & Brand, M 2012, ‘Antecedents of franchisee responses to franchisor initiated strategic change’, International Small Business Journal, vol. 69 no. 172, pp.114-126.

Dada, O 2013, ‘Entrepreneurial organisation and the franchise system; Organisational antecedents and performance outcomes’, European Journal of Marketing, vol. 47 no. 5, pp. 790-812.

Fock, H 2001, ‘Retail outlet location decision-maker: franchisor or franchisee’, Marketing Intelligence and Planning, vol. 19 no. 3, pp. 171-178.

Hoy, F & Stanworth, J 2014, Franchising; an international perspective, Routledge, New York.

Levy, M & Weitz, B 2007, Retailing management, McGraw-Hill, New York. Longenecker, J 2012, Small business management; launching and growing entrepreneurial ventures, Cengage Learning, Mason.

Maxwell, J 2005, Qualitative research design: an interactive approach, Sage Publication, New Jersey.

Megan, T 2010, ‘A framework for implementing retail franchises internationally’, Marketing Intelligence & Planning, vol. 28 no. 6, pp. 689-705.

Michael, S 2000, ‘Investments to create bargaining power: the case of franchising’, Strategic Management Journal, vol.21, pp. 497-514.

Michael, S 2002, ‘Can a franchise chain coordinate’, Journal of Business Venturing, vol. 17, pp. 325-341.

Michael, S 2003, ‘First mover advantage through franchising’, Journal of Business Venturing, vol.18, pp. 61-80.

Pizanti, I & Lerner, M 2003, ‘Examining control and autonomy in the franchisor franchisee relationship’, International Small Business Journal, vol. 21 no. 2, pp.131- 38.

Rundh, B 2003, ‘Rethinking the international marketing strategy; new dimensions in a competitive market,’ Marketing Intelligence & Planning, vol. 21 no. 4, pp. 249-257.

Ryans, J, Grittith, D & While, D 2003, ‘Standardisation versus adaptation of International marketing strategy; necessary conditions for advancements’, International Marketing Review, vol. 20 no. 6, pp. 588-603.

Sorenson, O & Sorensen, J 2001, ‘Finding the right mix: franchising, organisational learning and chain performance’, Strategic Management Journal, vol. 22 no.16, pp. 713-724.

Stanworth, J, Healeas, S & Purdy, D 2002, ‘Intellectual capital acquisition and knowledge management – new perspectives on franchising as a small business growth strategy’, ISBA National Small Firms Policy and Research Conference Proceedings, vol. 2 no.5, pp. 1507-1534.

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Truitt, W 2006, The corporation, Greenwood Press, Westport.

Tuunanen, M & Hyrsky, K 2001, ‘Entrepreneurial paradoxes in business format franchising: an empirical survey of Finnish franchisees’, International Small Business Journal, vol. 19 no. 4, pp. 47-62.

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Introduction

The article “Franchise firm entry time influence on long term survival” by Juste et al. (2008) presents a rather interesting outlook on franchise firm survival by focusing not on the market forces of supply and demand or even on methods of sustained development through management innovation, diversification and subsequent product development but rather it focuses on the concept of early entry as being a highly influential factor in the long term survival of a franchise firm.

This is a particularly interesting position to take especially when considering the fact that nearly 90% of all early entry businesses into new markets or new businesses with innovative approaches to address a particular need within a specific niche market fail within the first 5 years.

Taking this into consideration, the Juste et al. (2008) article should prove to be rather enlightening in terms of the innovative approach it has taken in discussing franchise firm survival especially when considering the breadth of research that apparently went into its creation.

Reasons for Choosing the Article

The main reason this particular article was chosen was due to its focus on the long term survival of franchises through early entry into a particular market. It presented the reasons as to why late entry into a market by a rival franchise often has a far lesser chance of survival as compared to a franchise that has already been well established within the local community.

On the other hand, another reason why I chose this particular article was due to the fact that upon reading it I discovered that the authors neglected to examine the extent of influence that a powerful brand could have on consumers.

While the article was able to connect early entry into a market with long term survival there were few factual points which reference the strategies that franchises utilized in order to survive in the long term.

This I believed was one of the inherent weaknesses of the article since based on my perspective brand promotion over a number years can have a power influence on consumers which leads to continued patronage and the survival of a franchise despite the entry of rivals into market.

As such I endeavored to research various cases involving well established corporations and sought to examine instances where improper/proper methods of innovation and change were utilized in order for them to continue surviving within their chosen market segments.

Aim of the Author

In the case of Juste et al. (2008) study it can be seen that the aim of the author was to show how franchises in Spain established in the early 1950s – 1980s and reach up till the present have been able to survive for so long due to their early entry into the market. This was done by comparing the survival rate of franchises at later dates and how they were unable to usurp the position of franchises that were established much earlier.

It is based on this that it can be assumed that the overall goal of the author was to prove that when it come to investing into a particular franchise or entering into a particular market it is best to do so as a market pioneer especially in cases where franchises are established in new international locations.

Position of the Author

The position of the authors in the case of this article is one where it is apparently recommended to invest into well established and well known franchises within a new market and in cases where new markets are found to become a pioneer into that particular market in order to take advantage of the first entry position.

Structure and Organization of Paper

For this particular paper a brief synopsis will be provided which points out exactly what Juste et al. (2008) set out to accomplish after which comes the evaluation of the strengths and weaknesses of their study.

In that section various articles will be compared to that of Juste et al. (2008) along with various case examples in order to test the veracity of their arguments. Lastly, the paper will conclude with recommendations regarding what could have been done in order to improve the Juste et al. (2008) article in order to “fix” the apparent weaknesses found by this examination.

Synopsis

The initial argument that Juste et al. (2008) presents is that entry time influences the type of strategic decisions a firm can employ as well as its long term survival.

In order to prove this point the Juste et al. (2008) study set out to examine the Spanish franchising industry from the latter half of the 1950s till 2004 in order to examine the extent from which long term survival could be determined from early entry into the Spanish market. They did so by examining catering (food restaurants) and fashion outlets as their primary subjects for examination.

It was their hypothesis that the earlier the entry of a particular franchise into the Spanish market the more likely it was to establish itself and result in long term survivability. On the other end of the spectrum the study also assumed that in cases where late entry was seen there would be a lesser degree of market survivability due to the presence of already well established brands (Juste et al. 112 – 115).

It was through this method of examination that Juste et al. (2008) looked to prove its assumption of long term survivability of first mover franchises within particular markets.

Evaluation of Strengths and Weakness

When evaluating the strengths or weakness of a particular article it is important to examine the factual points brought up by other articles in the same category in order to determine the effectiveness of the arguments being presented in the article that is being examined.

In the article of Ordish (2006) it can be seen that early and late entrants into a particular market had varying operational and management strategies which Ordish (2006) explains is a direct result of having to contend with different market situations (Ordish, 30).

Ordish (2006) goes on to state that in the case of early pioneers into a particular market there are rarely any other competitors and as such this enables them to establish a customer oriented rather than a competitor oriented strategy (Ordish, 30).

What must be understood is that there are three components to market orientation that dictate how a company acts within a competitive environment, these are: customer orientation, competitor orientation, and inter-functional coordination.

In the case of customer orientation a company spends what resources it has in gathering data on the needs and behaviors of various consumers, the same can be said for competitor orientation however it focuses on competitors instead (Smeets and Yingqi, 949 – 961)

It must also be noted that either method has a distinct weakness. Focusing too much on consumer orientation can actually blind a company to changes in the market or may actually stifle innovation since the company focuses too much on consumer satisfaction rather than changing based on trends (Smeets and Yingqi, 949 – 961).

Focusing too much on competitor orientation on the other hand results in too much time and capital being placed on competitive activities which results in companies at times neglecting their consumer bases and focusing too much on getting ahead of the competition (Relationship and innovation orientation in a business-to-business context, 59).

On the other hand both methods also have their own respective strengths such as the customer orientation strategy being more effective in uncertain markets whereas competitor oriented strategies become effective in fast growing markets (Smeets and Yingqi, 949 – 961).

Taking this into consideration, Costa (2011) explains that in cases where a company is the first mover in a particular market this gives it a considerable advantage by the mere fact that it can focus on a customer oriented strategy without having to worry about subsequent problems related to inter-market competition within the immediate future (Costa, 22).

This allows the company to develop itself as a viable brand and develop a well established reputation within its chosen market through a strategy that focuses more on developing proper relations with consumers. Costa (2011) goes on to state that “the power of a well established brand should never be underestimated since it can enable a company to persevere in the face of severe competition via the strength of its brand alone” (Costa, 22).

This particular statement by Costa (201) is in direct relation to what Juste et al. (2008) defines as “pioneering advantages” in the case of franchise firm entry times. From the perspective of Juste et al. (2008) “pioneers benefit from brand loyalty, higher switching costs and pre-emption of scarce resources such as locations, brand reputation or customer preferences” (Juste et al., 108).

One of the inherent weaknesses of the Juste et al. (2008) article was the fact that it neglected to elaborate on the possibility of new competitors armed with either more potent resources or capabilities from entering into the market and overtaking a first mover franchise’s market share. One particular case example where this is evident is the fall of Blockbuster and the subsequent rise of Netflix within the past 10 years.

What is notable in this particular case is that Blockbuster originally had a dominant position in the U.S. market. It had 3,000 stores and controlled 95% of the video rental market however it is interesting to note that its business model didn’t change much over time.

The chain was a first mover in entering into a sales structure that focused on providing consumers with as wide a selection of movie choices as possible and this proved to be a particularly wise business decision.

Combined with thorough brand awareness the chain was able to dominate the U.S. market and showed all the advantages indicated by Juste et al. (2008) as belonging to a pioneer in a particular market segment. By the late 1990s though it is obvious that Blockbuster was so competitor centered in maintaining its dominant position that it neglected to examine changes within its consumer base.

In fact it was at this point that online e-commerce systems which enabled consumers to make purchases online started to proliferate which enabled new companies to enter into previously hard to enter markets due to the flexibility and low cost nature of online sales and consumer marketing (Movies At Home, 33).

When Netflix began its online video rental service in the latter half of the 1990s this gave consumers a faster and more convenient method of video rental which subsequently eroded away at Blockbuster’s market position till by 2005 to 2009 when Netflix released its online video streaming service this could be considered the “final nail in the coffin” so to speak resulting in the dominance of Netflix and the complete erosion of Blockbuster’s previously dominant position (Movies At Home, 33).

Based on this case example it can be seen that entry time into a market by a franchise cannot be stated as a prelude towards long term survival without a certain degree of contention.

Juste et al. (2008) fails to elaborate more on this particular aspect and merely glosses over it by mentioning it on just a single line. This I believe is an inherent weakness in the article since it fails to take into account subsequent changes in markets via innovations and new market paradigms that are relevant in today’s way of doing business.

For example, first mover firms such as GE (General Electric) and IBM which have been around for more than several decades have moved along with market trends and innovations in order to continue to stay relevant in the present day. While it may be true that the paper focuses more on franchises rather than firms this lesson is still applicable.

First mover franchises need to stay relevant within their prospective markets by changing along with new consumer tastes (Relationship And Innovation Orientation In A Business-To-Business Context, 59).

This was seen by some of the new dietary innovations enacted by restaurants such as Wendy’s, Burger King and Olive Garden in order to keep pace with a consumer market that is slowly but surely turning towards healthier options in their food choices.

This push towards franchise innovation is lacking within the Juste et al. (2008) article and as such is a lapse in what needs to be present in any long term survival strategy. A single line does not do the concept justice since it is an integral aspect for any franchise.

On the other hand the article does present viable arguments in relation to the first mover principle which should not be immediately discounted. One of the first factors indicated by the article is that in cases of international expansion firms that enter early could achieve better locations within a market before it becomes overly saturated and more franchise chains look for more suitable locations.

One case example where this is evident is that of the Kenny Rogers franchise and its expansion into the Philippine market. It is rather interesting to note that within the U.S. the Kenny Rogers franchise never truly took off due to market saturation of similar restaurant franchises having the same product offering (Franchisee considers selling its Roasters restaurants, 3).

Due to dismal sales in its home market the franchise took the rather risky route of expanding abroad into new markets where such a degree of market saturation wasn’t evident (Franchisee considers selling its Roasters restaurants, 3).

One of the primary locations the chain expanded into during the latter half of the 1990s was the Philippines due to its English speaking population and the fact that archipelago had embraced various aspects of U.S. culture.

The result was phenomenal, due to the restaurant chain being one of the first to offer American style dishes and combo meals this enabled the company to expand into various ideal locations before other franchises of a similar type arrived within the country.

To this day the franchise has continued to survive within the Philippines despite stiff competition since it has continued to retain many of its original locations that it had expanded to. This particular example confirms the results indicated in the Juste et al. (2008) and shows that the study does in fact have credence to the facts it presents.

Conclusion and Recommendations

Overall the article showed a great deal of promise in showcasing how entry times into particular markets greatly influenced the long term survivability of particular franchises.

In fact it was quite effective in doing so by presenting data from the 1950s onwards showing how franchises that entered into Spain in the latter half of the 1950s to the 1980s were able to survive and thrive well into 2004 while others that hand entered later into the market were at greater risk of closure.

What I did notice though was the fact that the study was missing distinct details related to brand awareness and how particular brands can become incorporated into local cultures to such an extent that they become indivisible aspects of it.

What must be understood is that as franchises continue to grow within particular population centers their advertising initiatives combined with continuous consumer consumption of products actually integrates the brand name of that product into the local culture.

This results in better product awareness which translates into distinct consumer patronage for particular brands. Such an aspect has been documented by numerous studies yet it is strangely absent in this one. It must also be noted that a company’s strategies do change over time depending on changes within the market.

For example, as mentioned earlier customer orientation strategies are more effective in uncertain markets whereas competitor oriented strategies become effective in fast growing markets, the inherent problem with this is that markets tend to change over time as seen in the case of Netflix.

As such when markets change this necessitates changes in orientations as well with companies at times shifting towards either customer oriented or competitor oriented strategies. This was similarly glossed over by the article which should have mentioned it due to the fact that anticipating changes in markets and adapting to them is an integral factor in any franchises long term strategy.

It is based on this that it is recommend by this article critique that any future article that deals with the relation between entry time and long term survival should also include sections relating to the power of brand awareness and how this connects to the process of being pioneers into a particular market.

By having this particular aspect included into the study readers will be able to understand how branding plays and integral role in helping to ensure long term survivability. With the study as it is now in the present some readers may in fact assume that being an early pioneer into a particular market is all that is necessary to succeed.

This particular assumption would be fallacious and would cause many individuals to neglect the necessity of proper brand development and promotion. As such in order for people not to get the wrong idea in the future it will be necessary to include aspects related to the interconnectivity between brand development and early pioneering in order to present readers with a “full picture” of how the process actually works.

Works Cited

Costa, MaryLou. “First-Movers In Market For A Change Of Address.” Marketing Week (01419285) 34.42 (2011): 22. MasterFILE Premier. Web.

“Franchisee considers selling its Roasters restaurants.” Wall Street Journal – Eastern Edition 29 Dec. 1995: 3. MasterFILE Premier. Web.

Juste, VictoriaFirst, Laura Palacios, and Yolanda Redondo. “Franchise firm entry time influence on long-term survival.” International Journal of Retail & Distribution Management. 37.2 (2008): n. page. Print.

“Movies At Home.” Consumer Reports 74.3 (2009): 33. MasterFILE Premier. Web.

Ordish, Rebecca. “Testing The Franchising Waters In China.” China Business Review 33.6 (2006): 30. MasterFILE Premier. Web.

“Relationship And Innovation Orientation In A Business-To-Business Context.” South African Journal Of Business Management 41.4 (2010): 59. MasterFILE Premier. Web.

Smeets, Roger, and Wei Yingqi. “Productivity Effects Of United States Multinational Enterprises: The Roles Of Market Orientation And Regional Integration.” Regional Studies 44.8 (2010): 949-963. International Security & Counter Terrorism Reference Center. Web.

This paper provides a sophisticated overview of a successful franchise development as well as the factors that influence their work efficiency. The study focuses on the firm that overtakes Hard Rock Hotel brand.

The franchise development includes some distinct stages. First, it is crucial to determine the indivisible inputs that are provided by the owner of a firm. The indivisibility implies that a particular input can not be estimated below a fixed price (Economies of scale and scope, 2008). The business conception of the Hard Rock Hotel is based on the appliance of a particular interior, which incorporates musical instruments and the sound imitation services. Thus, the indivisible inputs are comprised of the setting elements as well as the installation of a specific sound system that follows the system of the original project.

The Characteristics of Perfectly Competitive Firms

The competitive qualities of a business are predetermined since the time of its development. A successful franchise usually matches the needs and requirements of the target auditorium as well as follows the pattern of an original establishment or service. Finally, it is crucial for any firm owner to ensure that the business conception is in some way better and more elaborate than the ones of the rival companies.

The perfectly successful companies share the distinct characteristics. First, they are based on highly efficient communication system (Chiou, Hsieh, & Yang, 2004). It mainly applies to the issue of franchise marketing. Second, a competitive firm uses valuable, high-quality materials and resources, which elaborates the performance results and attracts customers (Newbert, 2008). Third, an excellent company work principles dwell on the constructive innovation in the world of information technology since the modern world of convergent high-tech regularly updates the work standards (Rivard, Raymond, & Verreault, 2006).

The Hard Rock Hotel franchise complies with three basic notions of competitiveness. Thus, the management of the enterprise establishes a strong foundation of customers supports as well as advertising politics, which uplifts the principles of communication efficiency. Besides, the hotel administration uses exclusively original resources such as brand furniture models, and identical service functions since it replicates the genuine atmosphere of the successful firm. Finally, the hotel is supplied with the newly-developed connection tools that maintain a contact between a client and a receptionist as well as other essential services.

The Review of Fundamental Economic Profits

Every competitive firm that pursues some consistent long-term improvement objectives has to develop an economic profit planning. Some experts state that such accounts are extremely efficient if they are based on organizational, financial, and recompense factors (Hogan & Lewis, 2005).

The reviewed hotel management elaborates a particular economic profit formula that is comprised of individual elements. Thus, in a long run, the enterprise follows a standard, according to which a gross profit percentage does not get lower than 30 % (Huebsch, 2011). Moreover, the hotel service industry is based on a unique code of revenue sources that underline the economic profit of the company. Since the business conception of the Hard Rock Hotel implies a notion of music, the management of the franchise offers not only the basic services such as feeding, lodging, technical support maintenance but it is also connected to a huge concert hall and a karaoke bar. Therefore, the franchise uses the methods of efficient marketing by both keeping to an authentic idea of a music hotel and establishing its standards of functioning.

References

Chiou, J., Hsieh, C., & Yang, C. (2004). The effect of franchisors communication service assistance, and competitive advantage on franchisees’ intentions to remain in the franchise system. Journal of Small Business Management, 42(1), 19-36.

Economies of scale and scope. (2008). Web.

Hogan, C., & Lewis, C. (2005). Long-run investment decisions, operating performance, and shareholder value creation of firms adopting compensation plans based on economic profits. Journal of Economic and Quantitative Analysis, 40(4), 721-745.

Huebsch, R. (2011). Gross margin of hotels. Chron. Web.

Newbert, S. (2008). Value, rareness, competitive advantage, and performance: A conceptual level empirical investigation of the resource-based view of the firm. Strategic Management Journal, 29(7), 745-768.

Rivard, S., Raymond, L., & Verreault, D. (2006). Resource-based view and competitive strategy: An integrated model of the contribution of information technology to firm performance. Elsevier, 15(1), 29-50.

Introduction

DubaiStar is one of the small hotels in Dubai. Over the past five years, the hotel has been performing dismally and continued to incur any losses. To maintain its operations in the hotel industry in Dubai, DubaiStar hotel sought a Franchise relation with SunRoll America. SunRoll America is a chain of hotels whose operations are mainly based in North America.

SunRoll America is expected to allow DubaiStar to use its logo, trademark, and training to boost the operations of DubaiStar. Therefore, DubaiStar hotel will adopt the name SunRoll Dubai. Below are the major provisions of the Franchise Agreement between DubaiStar and SunRoll America.

Provisions of the Franchise Agreement between DubaiStar and SunRoll America

The Franchise agreement between DubaiStar and SunRoll America shall be based on the following agreements and understandings:

Duration of Franchise Agreement

The Franchise agreement between SunRoll America and DubaiStar shall be valid for seven years from the execution date of this agreement. Upon its expiry, the agreement shall be renewed based on the prevailing market value.

Use of Name, Logo, and Trademark

SunRoll America has developed various methods to enable it to establish, operate, and promote other small businesses in the hotel industry. Therefore, SunRoll America has agreed to grant DubaiStar hotel the right to use its logo and trademark. Therefore, DubaiStar will adopt the logo and trademark of SunRoll America. DubaiStar shall also change its name to SunRoll Dubai.

Location of the Franchise

DubaiStar hotel shall continue to undertake its operations in Dubai. SunRoll America will be required not to set-up a similar Franchise within a radius of 800 meters from the location of DubaiStar. However, this provision excludes other outlets that are located within buildings, malls, and schools.

Franchise Fee and Royalties

A non-refundable Franchise fee of 500 US dollars shall be charged upon the effect of this agreement. The Franchise fee shall be paid to SunRoll America by the DubaiStar hotel. In addition to the Franchise Fee, the DubaiStar hotel shall pay a monthly Royalty fee to SunRoll America.

The Royalty fee will be an amount that is equal to 5 percent of DubaiStar’s total monthly sales. In case of a renewal of the Franchise Agreement, new rates shall be negotiated between the Franchisor and the Franchisee.

Services

SunRoll America will mainly offer training to the employees of DubaiStar. The purpose of the trainings will be to ensure that employees at DubaiStar hotel are equipped with relevant skills and knowledge on how to undertake their roles.

On the other hand, the management of DubaiStar shall have the sole responsibility of managing the day-to-day operations of the Franchise. The management of DubaiStar shall also perform the task of staffing and recruitment of new employees. All employees will be under the full supervision of DubaiStar management.

Products

DubaiStar shall be required to replicate some of the products of SunRoll America such as refreshments, meals, and entertainment. DubaiStar shall also receive supplies from suppliers contracted by SunRoll America.

Dispute Resolution

Any dispute arising between SunRoll America and DubaiStar about the Franchise Agreement shall be resolved through court arbitration.

Conclusion

The above Franchise Agreement shall guide the relations between SunRoll America and DubaiStar hotel during the Franchise period. Both parties shall abide by the Franchise Agreement until its termination.

Abstract

DubaiStar is a small hotel in Dubai that has been underperforming since 2008. It is in the verge of collapse. The hotel has not been making profits for the last five years. Franchising is seen as a favourable method of improving its performance. The appropriate company that is found for the franchise is SunRoll America, which is a chain of hotels that operate mainly in North America. This company agreed to provide its logo, rights, trademark, and training to transform the hotel to SunRoll Dubai. The characteristics of the franchise agreement include its affordable price, easy payments, low royalties, effective training, marketing plan, quality products, dispute resolution venues, and jurisdictions. This essay discusses the implementation of some of the sections, which are essential in a franchise agreement. It also discusses the advantages and disadvantages of this undertaking.

Introduction

DubaiStar is a small hotel in Dubai. It has continued to underperform over the past few years for several reasons. The business has been on the decline since 2008. The only way to rescue it was seen as entering a franchise. The company that is selected to rescue DubaiStar is SunRoll America, which offers services that are almost similar to those offered by DubaiStar. SunRoll Dubai is an adequate franchise partner. The franchise agreement is also favourable for the two companies. The franchise agreement is favourable because it is affordable, easy in terms of payment, and has low loyalties. It also offers effective training opportunities to oversee the transformation of the company back into productivity. The following is an analysis of a franchise agreement.

Type of Agreement

The type of franchise that will be adopted between the two companies is the business type of franchise where the DubaiStar will engage in the whole business process that was used in SunRoll America. The business type of franchise suggested for use is also used in other firms such as in the fast foods industries in the US. The franchise agreement is also a single-unit franchise union since SunRoll Dubai will only operate one hotel in the city. SunRoll Dubai will operate the original store that was operated as DubaiStar to ensure that the same premises are utilised efficiently.

The agreement will involve providing services to the community and customers just as SunRoll does in any of its other branches. According to Inma (2005), this type of agreement enables a company to use the brand name of the other company to market itself. The reason behind the agreement is to increase the profitability. The agreement also ensures that the risks and liabilities are shared with the franchise company. Besides, funds are available for the joint projects.

Price

The agreement between SunRoll and DubaiStar will involve an initial payment for the agreement. The payment will be in the form of original services to be provided to DubaiStar. The price to be paid will also be for the contract that the two companies will be entering. According to Inma (2005), the price for a franchise agreement is a significant part of the agreement since it binds the two parties that are getting into this form of agreement. The payment between the two parties is also subject to changes based on the agreement between the two parties.

Despite the initial payments for the franchise, DubaiStar will have to factor in more added costs when getting into the agreement. Some of these payments include the loyalties that will be paid to SunRoll America for the provision of services under its name. The payment of loyalties for companies that are involved in a franchise is an important part of ensuring quality service delivery and/or enhancing the relationship between the two parties. In the case of SunRoll and DubaiStar, the agreement is that the loyalties should be paid on a yearly basis. The actual amount will be dependent on sales in the areas that the franchise covers.

A favourable characteristic of the agreement between SunRoll and DubaiStar is that the payment modes that are used are easy. Agreements on the payments will be undertaken for the two companies to be used in the operation of the hotel that is formed in Dubai. The services charged to customers of SunRoll Dubai will have a component of the payment that is to be given to the mother company in America. This strategy will ensure that the payment is easier and more effective.

Training

Training is an important part of any organisation and business. Any organisation that undertakes training for its employees is considered more successful (Sivakumar, & Schoormans, 2011). The franchise agreement between SunRoll America and DubaiStar has effective measures to undertake training. The human resource department at SunRoll America will train the staff people who are currently working at DubaiStar before the services can begin. The training will involve educating employees on the methods of conducting the services as per the standards at SunRoll America. Staff members will also be taught certain values such as ethics, relationship with customers, and the right procedures to use at the workplace.

The other form of training that will take place at the organisation is the training of employees to be recruited into the franchise. The number of staff people who are currently working at DubaiStar is inadequate to meet the need of the franchise that will result. Therefore, there is a need to increase the number of employees while at the same time ensuring that they are adequately skilled to provide the best services to customers. The human resource department will carry out the training practices laid down in the franchise agreement. A special unit in this department will be formed to oversee this training.

Inma (2005) reveals that an internship is an important part of training in any organisation. SunRoll America has an internship programme in place. The franchise agreement means that the training programme in existence at SunRoll America will continue to be applied in SunRoll Dubai. SunRoll Dubai will also have a training plan that will be operational at the operating period of the company. Employees will be required to undertake training activities while at the organisation. This process will be done in internal and external training institutions.

Marketing Plan

The marketing plan that will be adopted for the new company will ensure that the organisation is popularised in the Dubai. The company will use a significant part of the revenues to market itself. Marketing is a major component of any organisational framework. It allows the organisation to increase its competitiveness. One major marketing tool that will be used to market SunRoll Dubai is the brand name that will be created. According to Inma (2005), the brand name is an important part of marketing. Any marketing campaign is only effective if there is adequate brand strength.

One of the reasons that franchises exist is so that one of the parties may use the brand name of another party that is considered better performing (Sivakumar, & Schoormans, 2011). Some brands are internationally recognised. Customers are attracted to the brand name based on their experience with the brand or the experiences of others (Inma, 2005). SunRoll Dubai will be relying on the brand name that exists in the form of SunRoll America. This firm has managed to create a relatively strong brand in the international arena. If this brand is used, it will attract a large number of customers to the organisation.

The other tool that will be widely applied in the marketing plan for SunRoll Dubai is print advertising. The company will advertise the services in many of the available print media. The franchise will use the advertising campaign that is use by SunRoll America to advertise its products and services. One of the advantages of franchising in advertising is that the marketing campaign is standard in many aspects, only varying based on the different preferences and characteristics. The other forms of marketing that will be used include television adverts and the internet.

The use of the internet in marketing has risen over the past few decades. Many companies have a website to run online marketing. SunRoll America has a website that it uses to market its goods and services. However, this website is limited for use in other parts of the world. It is not widely used in the UAE or Dubai. SunRoll Dubai will create a new website that will be used to market the company in Dubai. The launch of this website will also be marketed, with some services such as bookings and reservations being made. This form of marketing is effective in areas where the population has access to the internet such as Dubai (Perrigot, & Pénard, 2013). The website will also be a link to the mother company where the services provided by SunRoll America will also be available.

SunRoll Dubai will embark on the establishment of a loyalty programme in the region and the city in general. This programme will be used to reward the loyal customers of the organisation. Frequent customers will have special services and rates, which will be determined by the loyalty programme in place. The institution of a loyalty programme promotes the marketing of an organisation to its customers. Besides, it creates a method of attracting and retaining new customers (Madanoglu, Lee, & Castrogiovanni, 2013). The franchise will create a marketing plan that is better than the one that was previously applied in DubaiStar.

Products

The products that will be available after the franchise will be similar to those that are offered by SunRoll America. In the form of franchise that the two parties entered, DubaiStar will be allowed to replicate the products offered by SunRoll America. The specifications for the products to be provided under the franchise will be provided by SunRoll America. The paid loyalties will allow the production of products under the same name as those offered by SunRoll America. The Dubai part of SunRoll will have the same requirement for staff people, just like in SunRoll America.

Some of the products that will be available in the franchise include the food provided by SunRoll America, the refreshments, and the same services. The other part of the agreement between SunRoll and DubaiStar is that the Dubai-based company will accept some of the products it has to offer from suppliers who are contracted by SunRoll America. The supply of these products to SunRoll Dubai will be crucial in that it will ease the process of procurement and inventory management.

Dispute Resolution and Jurisdiction

Dispute resolution or jurisdiction is an important part of any franchise agreement between organisations. In the relationship between SunRoll America and DubaiStar, adequate measures have been made to ensure that the two organisations solve any disputes amicably. The agreement spells out the terms of the contract clearly, including measures to be taken in the event that one of the partners breaks the accord. The payment of the prices spelled under the contract agreement is one of the areas that the agreement specifies the methods of dispute resolution. The franchise requires DubaiStar to pay the agreed amount in full.

The other area of interest in the franchise agreement is the ethics part where the interaction between the two companies and their employees is spelt out. SunRoll America is to oversee the transition from DubaiStar to SunRoll Dubai. The process to be followed is indicated in the contract agreement. The other part of the agreement is the jurisdiction that is to be followed. This jurisdiction is favourable in the franchise agreement between SunRoll America and DubaiStar.

Advantages of the Franchise

The franchise between SunRoll America and DubaiStar has several advantages over any other form of interaction between the two organisations. One of the advantages is that the franchise allows DubaiStar to enter business with the help of a partner. According to Inma (2005), a franchise allows individuals to enter a business by themselves because businesses are associated with risks. Franchises are involved in the reduction of these risks.

Another advantage of the franchise is that there is a relatively high level of independence, despite the interaction being associated with accountability. As Inma (2005) observes, in the case of SunRoll America and DubaiStar, the franchise agreement allows DubaiStar to offer the same services that are available at SunRoll America with independence. This independence allows the organisations to exercise responsibility while improving on their skills and output. Firms in a franchise are also able to exercise diversity in their operations. By operating in a franchise, a firm can enter a market more easily than when using other forms of business agreements. Employees are also diverse. They are allowed to work in the existing cultures of their area.

As stated earlier, the other advantage is that the practice of franchising offers a product that mostly enjoys a good brand performance. The presence of a strong brand name allows the new organisations operating in the franchise to use the brand name to attract more customers as opposed to using their own brand name (Szulce, & Świekatowski, 2014). In the case of SunRoll America and DubaiStar, the latter company will be using the renowned brand name for SunRoll America to increase performance in the brand in Dubai.

Apart from the strong brand name that is associated with franchising, the other advantage of this method of partnership in organisations is that it allows organisations to market the already existing products. The marketing of new products requires a large input in the form of capital. Most organisations may not afford this amount (Sivakumar, &Schoormans, 2011). When firms such as DubaiStar and SunRoll America enter a franchise agreement, the new organisation provides goods and services that are already proven effective (Sivakumar, & Schoormans, 2011). This process saves the company money and time that would have been used in the development of a new product.

A franchise agreement will be a good way of attracting more customers to the organisation that was initially unproductive. The franchise agreement sets a level of consistency in the products on offer. This means that the organisation can attract more customers based on this plan. Some of the other advantages that are associated with a franchise agreement are increased support for the new organisation in terms of training, financing, construction and design, advertising, bulk purchasing, and operational assistance. Therefore, the franchise agreement will lead to a positive change in the organisation.

Disadvantages

There are a number of disadvantages in a franchise agreement. Despite the high degree of independence that is reported as a favourable factor in this agreement, independence in this form of business is not complete. The franchises are required to operate within the restriction and procedures stated in the franchise agreement between the two parties (Hossain, & Wang, 2008). For example, SunRoll Dubai is required to act within the procedures that are spelled by the franchise agreement. Some of the features spelt in the agreement include products that may be offered, the geographical area where this move is to take place, and the prices at which the products should be offered (Hua, & Dalbor, 2013). These restrictions limit the franchise and the profits that may be realised if these conditions were absent.

The other drawback of having a franchise is the sovereignty and commercial charges that are to be remunerated. SunRoll Dubai will be required to pay significant amounts of money to SunRoll America in the form of royalties and advertising fees. This money can be spent in other areas, and hence the disadvantage of having a franchise. The other disadvantage of such a business plan is that the charter must be able to set of scales between the limitations made by the franchisor against the entity capacity for the organisation. SunRoll Dubai has a number of ambitions that are not in the agreement. The achievement of these ambitions will require the company to carry out an analysis of the restrictions under the agreement so that they (the ambitions) are not conflicting with SunRoll Dubai’s ambitions.

Another problem that may arise in the future is linked to the nature of franchises. Since the two companies are interlinked in terms of brands, there might be consequences for SunRoll Dubai if the brand name undergoes challenges in another part of the world. In the case of the present franchise agreement, SunRoll Dubai can face losses if SunRoll America experiences challenges in the home country such as image damage. The termination of a franchise agreement may also be unfair to the organisation.

Conclusion

In conclusion, a franchise agreement allows an organisation to offer goods or services under a well-known brand name. In the franchise agreement between DubaiStar and SunRoll America, a new organisation will be formed to offer services that are offered by SunRoll America. The franchise will be called SunRoll Dubai. Some of the terms of agreement and the means to effect the agreement have been provided.

Reference List

Hossain, T., & Wang, S. (2008). Franchisor’s Cumulative Franchising Experience and Its Impact on Franchising Management Strategies. Journal of Marketing Channels, 15(1), 43-69. Web.

Hua, N., & Dalbor, M. C. (2013). Evidence of franchising on outperformance in the restaurant industry: A long-term analysis and perspective. International Journal of Contemporary Hospitality Management, 25(5), 723-739. Web.

Inma, C. (2005). Purposeful Franchising: Re-thinking of the Franchising Rationale. Singapore Management Review, 27(1), 27-48. Web.

Madanoglu, M., Lee, K., & Castrogiovanni, G. J. (2013). Does franchising pay? Evidence from the restaurant industry. Service Industries Journal, 33(11), 1003-1025. Web.

Perrigot, R., & Pénard, T. (2013). Determinants of E-Commerce Strategy in Franchising: A Resource-Based View. International Journal Of Electronic Commerce, 17(3), 109-130. Web.

Sivakumar, A. A., & Schoormans, J. L. (2011). Franchisee Selection for Social Franchising Success. Journal of Non-profit & Public Sector Marketing, 23(3), 213-225. Web.

Szulce, H., & Świekatowski, R. (2014). Franchising as an instrument of integration in higher education. Log forum, 10(2), 175-183. Web.