Unit 4 Franchising

1. KEY VOCABULARY (SB page 34) Learn

Franchising is a business system in which a company (or franchiser) sells an individual (or f ranchisee) the right to operate a business using the franchiser’s established system or format.

As part of the franchise agreement the franchisee pays an initial sum of money, a franchise fee or front end fee, to the franchiser and agrees to pay a royalty or management services fee, for continuing advice and assistance, which is usually calculated as a percentage of annual turnover. The franchisee may also pay an advertising fee to contribute to the franchiser’s annual advertising and marketing costs. The franchisee also has to find the necessary capital to open the business.

The franchiser provides an operations manual, which contains all the information that the franchisee needs to run his or her business. A franchisor may appoint a master franchisee to supervise the business in a particular area.

• Franchise store - находящийся в независимой собственности магазин, в котором продаются товары фирмы, подписавшей с ним франчайзинговое соглашение магазин выплачивает франчайзеру определенный процент от объема продаж за использование его имени.

• Franchising – франчайзинг

• Franchiser - франчайзер

• Franchise agreement – франчайзинговое соглашение

.• A franchise fee / front end fee – франшиза. Сумма, выплачиваемая при покупке лицензии

• Royalty / management services fee – роялти. Регулярные выплаты за использование собственности, ноу-хау принадлежащей иному лицу. (В том числе, авторские выплаты за использование произведения.)

Annual turnover – годовой оборот

Advertising fee – выплаты за рекламу

Marketing costs - издержки по маркетингу, сбыту

Operations manual – руководство, сборник инструкций

A master franchisee – куратор

 

 

2. LEAD –IN (SB: ex 3 page 35. Tapescript: TB page 15) Learn

 

Research reveals that 50% of all new businesses fail because of the high risk rates in the sector of small business.

The main advantage of franchising for a franchisee is reduced risk because you are investing in a business that’s already operating. It’s a safe bet. But the franchisee has to accept certain conditions as part of the deal. For instance, there are rules that must be followed. This could concern, perhaps, the choice of the suppliers, the range of products to sell in the shop, the way the employees should dress and behave, the type of information that must be provided, such as regular reports on sales. If a franchisee wants to sell the business he or she would have to get the approval of the franchiser.

From the franchiser’s position it’s really a very different view. The franchiser, the inventor of whatever the product or service is, wants to expand his business to cover as much territory as he can. Now the real advantage here is that he can do that without having to invest his own capital and without having to recruit and manage personnel. All that is taken care of by the franchisee. From then on, he or she can simply watch the increased fees coming in as his company expands. In addition to that, the franchiser can also keep tight control over the way that the individual franchisees actually manage their businesses and take action if things go wrong.

 

 

3. VOCABULARY for the text One Day in my Life. (SB page 36)

 

 

• trademark – торговая марка

• market research / MR / marketing research company / to make a research into …

• estimated costs – предположительные расходы, смета

• start up costs – стартовые издержки

• real estate - недвижимость

• overheads – a regular cost of running a business: rent, salaries, heat, light, etc. - Hнакладные расходы, не связанные напрямую с производством продукта

• fixtures and fittings / f & f / - текущий ремонт

• to charge fee – назначать цену // free of charge - бесплатный

• leasehold – владение на правах аренды

• rent – арендная плата

• the required start-up capital – стартовый капитал

• working capital / operating capital/ - оборотный капитал

• revenue / return profit – прибыль

• gross sales – валовая выручка (брутто, до вычетов

• gross margin / gross profit margin – Совокупная прибыль. Разница между нетто-объемом продаж и стоимостью проданных товаров. Служит основой чистой прибыли /gross profit /

• vendor account – банковский счет поставщиков

• utility deposit – банковский счет на коммунальные услуги

• initial inventory – начальный товарный запас

• insurance – страховка

• to expedite the process – способствовать, ускорять

• dedication – целеустремленность, преданность делу, /to dedicate, to be dedicated

• payroll – деньги на выплату зарплат, платежная ведомость

 

4. LISTENING (SB ex 2 page 42, transcript TB page) Learn

 

I suppose that to be a successful franchisee you need to have a lot of dedication to the job. In this business you are to tackle a lot of things at a time: keep up the records and the payroll, look after the maintenance and update of the equipment. Accurate paperwork is probably eighty percent of the job in my view.

On the management side, I think the main thing is really to take good care of your employees because one of the main problems with the job is staffing, finding the right people to work with you. If they don’t enjoy doing their work then customers are not going to enjoy being with them.

It’s never easy to handle the money management of the business since there’s a basic instability in the whole thing. You can never be sure of exactly how much you are going to sell – your revenues are unpredictable. You just can’t guarantee that X number of people will come in and buy your product. But on the other hand you have to keep up with the bills and pay them on time.

I think that you really need to have a long-term vision looking into the future with hope. The franchise business doesn’t give you an immediate payback. So you have to be patient and enjoy the daily success of the business in order to maintain it. Well, in your relationship with your franchiser the central thing is trust and faith. They have certain standards that they want you to adhere to. So you have to comply with their rules and follow their formula of the business.

 

5. WRITING E-MAIL Enquiry letter. 100 –150 words (SB: page 42 - 43)

You are considering the opportunity of • acquiring a license for Dunkin’ Donuts franchise. Write an e-mail enquiry letter to the headquarters office enquiring information on the following issues:

• franchise agreement • training course

• the required start-up capital • store design

• royalty fee • a brochure and the operations manual

• overheads

 

Use the phrases below. For the lay out of an e-mail letter look at the reference section at the end of the brochure:

• To…Subject… / • I would be very interested in obtaining more information about … / • I intend to … / • Could you please tell me …/ • Please, let me know…. / I would be grateful if … / • Looking forward to hearing from you.