franchise

Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc - meaning free, and is used both as a noun and as a (transitive) verb.[1]  For the franchisor, the franchise is an alternative to building 'chain stores' to distribute goods and avoid the need for investments and liability for a chain. The franchisor's success depends on the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.

Thirty three countries, including the United States, China, and Australia, have laws that explicitly regulate franchising, with the majority of all other countries having laws which have a direct or indirect impact on franchising

Obligations of the parties

Each party to a franchise has several interests to protect. The franchisor is involved in securing protection for the trademark, controlling the business concept and securing know-how. The franchisee is obligated to carry out the services for which the trademark has been made prominent or famous. There is a great deal of standardization required. The place of service has to bear the franchisor's signs, logos and trademark in a prominent place. The uniforms worn by the staff of the franchisee have to be of a particular design and colour. The service has to be in accordance with the pattern followed by the franchisor in the successful franchise operations. Thus, franchisees are not in full control of the business, as they would be in retailing.

A service can be successful if equipment and supplies are purchased at a fair price from the franchisor or sources recommended by the franchisor. A coffee brew, for example, can be readily identified by the trademark if its raw materials come from a particular supplier. If the franchisor requires purchase from his stores, it may come under anti-trust legislation or equivalent laws of other countries.[1] So too the purchase of uniforms of personnel, signs, etc., as well as the franchise sites, if they are owned or controlled by the franchisor.

The franchisee must carefully negotiate the license. He and the franchisor must develop a marketing or business plan. The fees must be fully disclosed and there should not be any hidden fees. The start-up costs and working capital must be known before the license is granted. There must be assurance that additional licensees will not crowd the "territory" if the franchise is worked according to plan. The franchisee must be seen as an independent merchant. He must be protected by the franchisor from any trademark infringement by third parties. A franchise attorney is required to assist the franchisee during negotiations.

Often the training period - the costs of which are in great part covered by the initial fee - is too short in cases where it is necessary to operate complicated equipment, and the franchisee has to learn on his own from instruction manuals. The training period must be adequate, but in low-cost franchises it may be considered expensive. Many frachisors have set up corporate universities to train staff online. This is in addition to providing literature, sales documents and email access.

Also, franchise agreements carry no guarantees or warranties and the franchisee has little or no recourse to legal intervention in the event of a dispute. Franchise contracts tend to be unilateral contracts in favor of the franchisor, who is generally protected from lawsuits from their franchisees because of the non-negotiable contracts that require franchisees to acknowledge, in effect, that they are buying the franchise knowing that there is risk, and that they have not been promised success or profits by the franchisor. Contracts are renewable at the sole option of the franchisor. Most franchisors require franchisees to sign agreements that mandate where and under what law any dispute would be litigated.

Kerugian usaha Franchise:

   1. Kewenangan outlet di tangan Franchisee (kalau terlalu banyak ide merepotkan Franchisor)

   2. Perlu perubahan paradigma (paradigm shift) atas materi yang dijual

   3. Untuk membentuk sistem yang baku, perlu adanya proses yang lebih birokratis

Keuntungan Sistem Franchise:

   1. Percepatan perluasan usaha, dengan modal relatif rendah

   2. Efisiensi dalam meraih target pasar melalui promosi bersama

   3. Terbentuknya kekuatan ekonomi dalam jaringan distribusi

   4. Menggantikan kebutuhan personel Franchisor dengan para operator milik Franchisee (slim organization)

   5. Pemilik outlet bermotivasi tinggi karena menyangkut pengembalian investasi dan keuntungan usaha

Penyebab kegagalan:

   1. Franchisor serakah memungut franchise fee

   2. Monitoring yang lemah

   3. Kesalahan merekrut franchisee

   4. Kelemahan pada divisi R&D

   5. Perjanjian yang tidak tegas dan jelas

   6. Sistem operasional yang terlalu rumit

Kunci Sukses Franchising:

1. The more simple, the more success

2. Berorientasi kepada suksesnya franchisee

3. Terus melakukan inovasi dan pengembanga

                                                                         

-Eleven is part of an international chain of convenience stores, operating under Seven-Eleven Japan Co. Ltd, which in turn is owned by Seven & I Holdings Co. of Japan.

7-Eleven, primarily operating as a franchise, is the world's largest operator, franchisor and licensor of convenience stores, with more than 39,000 outlets,[3] surpassing the previous record-holder McDonald's Corporation in 2007 by approximately 1,000 retail stores.[4] The US subsidiary of the Japanese firm has its headquarters in the One Arts Plaza building in downtown Dallas, Texas.[5] Its stores are located in 16 countries, with its largest markets being Japan, the United States, Canada, the Philippines, Hong Kong, Taiwan, Malaysia and Thailand.

History

One Arts Plaza, which houses the US headquarters of 7-Eleven

The company has its origins in 1927 in Dallas, Texas, when an employee of Southland Ice Company, Joe C. Thompson, started selling milk, eggs and bread from an ice house.The original location was an improvised storefront at Southland Ice Company, an ice-manufacturing plant owned by John Jefferson Green. Although small grocery stores and general merchandisers were present in the immediate area, Thompson, the manager of the ice plant, discovered selling convenience items, such as bread and milk, was popular due to the ice's ability to preserve the items. This significantly cut back on the need to travel long distances to the grocery stores for basic items. Thompson eventually bought the Southland Ice Company and turned it into Southland Corporation, which oversaw several locations which opened in the Dallas area. Initially, these stores were open from 7 am to 11 pm, hours unprecedented in their length, hence the name. The company began to use the 7-Eleven name in 1946. By 1952, 7-Eleven opened its 100th store. It was incorporated as Southland Corporation in 1961.

In 1962, 7-Eleven first experimented with a 24-hour schedule in Austin, Texas. By 1963, 24-hour stores were established in Las Vegas, Fort Worth, and Dallas.

In the 1980s, the company ran into financial difficulties, selling off its ice division, and was rescued from bankruptcy by Ito-Yokado, its largest franchisee. In 1987, John Philp Thompson, the CEO of 7-Eleven, completed a $5.2 billion management buyout of the company his father had founded.[12] The buyout suffered from the 1987 stock market crash and after failing initially to raise high yield debt financing, the company was required to offer a portion of the company's stock as an inducement to invest in the company's bonds.[13][14]

The Japanese company gained a controlling share of 7-Eleven in 1991,[9] during the Japanese asset bubble of the early 1990s. Ito-Yokado formed Seven & I Holdings Co. and 7-Eleven became its subsidiary in 2005. In 2007, Seven & I Holdings announced it would be expanding their American operations, with an additional 1,000 7-Eleven stores in the U.S.

Products and services

1.2-liter Super Big Gulp

Among 7-Eleven's offerings are private label products, including Slurpee, a partially frozen soft drink introduced in 1967,[15] and the Big Gulp introduced in 1980[15] that packaged soft drinks in large cups ranging in size from 20 to 64 US fluid ounces (0.59 to 1.9 liters).

Other products

In addition to Slurpee and the Big Gulp, 7-Eleven would come to own or operate several brands of food and concepts, including Movie Quik, an in-store video-rental service; Citgo, the gas brand sold at many locations up until 2006; as well as Chief Auto Parts, which had locations adjacent to or near several 7-Eleven locations. They bought White Hen Inc. on August 10, 2006, mostly in or around the Chicago area, and plan to convert all of the remaining White Hens to 7-Eleven stores.

Since 2005, the company has offered 7-Eleven Speak Out Wireless, a prepaid phone service where a cellphone can be purchased directly from a 7-Eleven store in the US and Canada and activated on the spot.

The 7-Eleven convenience store announced on November 3, 2009 that it was releasing two low-priced proprietary wines in the United States and Japan (under the "Yosemite Road" brand)