Franchise, Business, and Family Dynamics: Key Aspects
Franchise Advantages and Disadvantages
Advantages of Franchising:
- Probability of success: Proven line of business, pre-qualification of franchisee.
- Training: Franchisor-provided.
- Financial assistance: Franchisor assistance.
- Operating benefits: Franchisor-aided.
Disadvantages of Franchising:
- Franchise costs: Initial franchise fee, investment costs, royalty payments, advertising costs.
- Restrictions on business operations.
- Loss of independence.
- Lack of franchisor support.
Types of Franchising Arrangements
- Product and trade name franchising (e.g., Toyota).
- Business Format Franchising (e.g., Starbucks).
- Master Licensee (e.g., McDonald’s).
- Multiple-Unit Ownership (e.g., Fast Food).
- Area Developers.
- Piggyback Franchising (e.g., Subway).
Reasons for Buying an Existing Business
- Reduction of uncertainties of startup.
- A bargain price.
- A quick start.
- Acquisition of ongoing operations and relationships.
Family and Business Overlap
Family Concerns:
- Care and nurturing of family members.
- Employment and advancement in the firm.
- Loyalty to the family.
Business Concerns:
- Production and distribution of goods and/or services.
- Need for professional management.
- Effective and efficient operation of the firm.
Family Roles and Relationships
Parental Concerns in Passing the Business On:
- Does my child possess the temperament and ability necessary for business leadership?
- How can I, the founder, motivate my child to take an interest in the business?
- What type of education and expertise will be most helpful in preparing my child for leadership?
- What timetable should I follow in employing and promoting my child?
- How can I avoid favoritism in managing and developing my child?
- How can I prevent the business relationship from damaging or destroying the parent–child relationship?
Husband–Wife Teams:
- Opportunity to share more in each other’s lives.
- Business differences interfere with family life.
- Work doesn’t leave time for family life.
- Sharing family responsibilities eases the load.
Sons and Daughters:
- Personal preferences different from the business.
- Personal qualifications insufficient to assume role in business.
- Desire for personal freedom to choose another career.
Sibling Cooperation, Sibling Rivalry:
- Best case: Siblings work as a team, each contributing services according to his or her abilities.
- Worst case: Siblings compete as rivals and disagree about their business roles.
In-laws In and Out of the Business:
- Disagreements about how to treat and reward in-laws and family members/children.
- Assign to different branches or to different business roles.
The Entrepreneur’s Spouse: Communication between entrepreneur and spouse is critical for their performance as an effective team for both the business and the family.
Stages of Succession in a Family Business
- Pre-Business Involvement.
- Education and personal development.
- Proof of Competence.
- Formal Start in the Business.
- Declaration of Succession.
CRM and Its Main Focus
A company-wide business strategy designed to optimize profitability and customer satisfaction by focusing on highly defined and precise customer groups.
Focus of CRM:
- Customers rather than products.
- Changes in processes, systems, and culture.
- All channels and media involved in the marketing effort, from the Internet to field sales.
The Importance of CRM to the Small Firm
Economic benefits of maintaining relationships with current customers:
- Acquisition costs for new customers are huge.
- Long-time customers spend more money than new ones.
- Happy customers refer their friends and colleagues.
- Order-processing costs are higher for new customers.
- Old customers will pay more for products.
Using Technology to Support CRM
- CRM Software.
- Telephone Contacts.
- Online Shopping.
- Customer Relations.
- Customer Support.