Franchise

The franchisor giving certain rights to the franchisee within a certain period of time  A business method that involves the licensing of trademarks and methods of doing business  Usually chain stores
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Applicants have a meeting with franchisor

Contract
Franchisor provides training to franchisee Select the venue of the store and hire staffs

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Franchisor:
› Plan location and decoration of the

franchisee’s shop › Provide training › Give continuous guidance and assistance to franchisee
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Franchisee:
› Pay entrance fees › Pay certain percentage of sales revenue as

franchisee fees

7-Eleven  Starbucks  KFC  Burger King  Pizza Hut  GONG CHA  Happy Lemon
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Entrance Fee : 450,000 – 550,000
› Include a returnable stock deposit of 200,000

Operating period given: 5 years  Venue: Franchisee can select from the existing 7-11stores, except the newly opened stores  Rent: pay by franchisor  Franchisee need to attend a 60-days training course (for free)

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Entrance Fee :
› Returnable stock deposit : $30,000 › Purchase of Equipment : $120,000 ~ $130,000 › Decoration Fee : $150,000 ~ $200,000 › FEHD License Fee : $20,000 › Stock Purchase : $120,000 ~ 150,000

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Operating period given: 3 years
› From the 4th year, contract need to be renewed

per 2 years for $40,000

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Consultant
› Consultancy fee : $2,000 each time › Commissioner need to come at least 1

time/month during the first six months

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Franchise to one company ONLY
› Starbucks  Maxim’s › KFC (HK)  Birdland (Hong Kong) Limited

› Burger King  SSPHK (Airport and The Peak)

 NAS Holdings (Others) › Pizza Hut  Jardines Group
›
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This kind of franchisees can franchise to others

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Expand regionally, nationally and internationally No need to take care of daily operations of the branches Can concentrate on the development of the whole business Franchisee can find out new areas of business Earn the entrance fees and regular franchisee fees Block the chance of loss

No need to spend long period of time to build the company’s reputation  Burden is less than independently setting up a new business  Obtains support from the head office  Can learn the way to run a business  Ensure there is not other competing franchise business around
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Franchisee can become a competitor  Franchisee may hurt the reputation of the head office
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Have to follow the requirements of the franchisor  Lack of self determination or scope of creativity  The franchisee cannot take all the profits  Have to pay a certain percentage of sales revenue as franchise fees
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Textbook  Wikipedia (English / Simple English)
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› en.wikipedia.org / simple.wikipedia.org

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7-11
› http://www.7-eleven.com.hk

GONG CHA
› http://www.gong-cha.com

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Online Forum
› http://forum.online.hk/viewthread.php?tid=966&extra=pa

ge%3D1&ordertype=1