Franchise Business Strategies, Ethics, and Planning: Key Concepts for Students

Mission

The long-term direction of a business.

Strategic planning scenarios

Examples of decision-making processes for business ventures.

Objectives

The purposes, goals, and desired results for a business and its parts.

Mission statement

Defines the present business scope and broadly describes the organization's present capabilities, focus, and activities.

Franchisee

A person or entity that operates a franchise.

Legal advice

Guidance provided by a lawyer regarding legal rights and obligations.

Code of ethics for franchisers

Guidelines established by the International Franchise Association (IFA) that franchisers must follow.

Fast Franchises

Businesses that cater to time-pressed customers.

Professional assistance

Help from experts when reviewing franchise agreements.

Synergy

The concept that two or more people, working together in a coordinated way, can accomplish more than the sum of their independent efforts.

Franchise agreement

An agreement that grants the right to do business and specifies the terms and conditions under which a business will operate.

Franchise trade shows

Events where franchisers display their products and discuss issues with franchisees.

Objective

A short-term end to help achieve the long-term aim of a business.

Strategy

The course of action needed to achieve the long-term aim and the short-term end of a business.

SWOT analysis

A useful tool for strategic planners in business analysis structured in the form of a matrix.

Planning

The first step in performing a series of managerial functions that sets the imminent course of action for a business.

Components of strategic planning

An organization's strategies, mission, and objectives.

Business's mission

Plans the basic services that the business plans to execute and is concerned with long-term financial achievements.

Recruitment of new franchisees

The basis for franchisees' compensation that franchisers must agree not to use according to the IFA code of ethics.

Working families

Groups that have fewer hours to spend together than they did before, leading to the rise of Fast Franchises.

Human resources

The personnel that make up a business's work force.

External environmental factors

Factors that affect small businesses, such as foreign competition and clients.

Strategies

Means by which a business achieves its objectives and fulfills its mission.

Operational planning

Includes selecting a business's location and creating its organizational framework.

Low production

Results in a decrease in the availability of goods.

Costs of purchasing materials

Account for more than 50 percent of the cost of products a company sells.

Net profit

The amount of revenue or sales over and above the total amount of expenses or costs of doing business.

Cash flow

The amount of cash available at a given time to pay the expenses of a business.

Business plan

A formal plan prepared to serve as a tool for attracting the other components of the business formation package, including people and money.

Financial planning

Involves calculating the initial capital required to establish the business and estimating the business's income and expenditures.

Cash flow projections

Made when starting a business to keep investments low.

Estimation of sales

The first step in a firm's planning operations.

Equity investors

Those who actually become part owners of the business.

Largest expense for a company

The cost of purchasing material.

True statement about effective business plan

It helps in planning the business's continuing operations and provides an elaborate blueprint for the activities required to finance the business.

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