Question

Basic Entrepreneurship

Franchising is based on a marketing concept which can be adopted by an organization as a strategy for business expansion. Where implemented, a franchiser licenses its know-how, procedures, intellectual property, use of its business model, brand, and rights to sell its branded products and services to a franchisee. In return the franchisee pays certain fees and agrees to comply with certain obligations, typically set out in a Franchise Agreement. Discuss the following: 1. 2. 3. History of franchising. Importance of franchising industry to the economics and social. Level of franchising development in Malaysia. Format: Font Font Size12 Spacing Double No. of Pages :Not exceed 5 page (exclude cover page and reference) : Times New Roman

Answer 1

1 History of franchising: It has very old roots and with examples of landowners who had franchise like agreements with tax collectors, who were collecting money on their behalf and by retaining some part of it were giving rest of the amount to landowners. In England in 17th century franchisees were given rights to operate fairs.

But franchise concept thrived and became popular and most successful in USA and it had seen many franchise businesses to be successful and even failure also, i.e. Franchise business by druggist John S. Pemberton who made a beverage and then a sewing machine company the Singer company who failed due to low profit in spite of goods sales of sewing machines but in spite of that franchise concept as a business model does not stop and thrived in the later years.

General motors a automotive company was successful in franchise business concept in order to make this model a success. Rexall which was a group of druggists and were invited by Louis K Ligget to join a drug cooperative and later it had become franchiser and was a successful one.

MacDonlad's , Subway, Dunkin' Donuts, H & R Block are some of the largest franchise chains in USA and worldwide.

2 Importance of franchising industry to the economics and social

Franchising industry has played a very big role in the economy of the local industry and of country and worldwide as a whole, it has contributed in terms of job creations for the local economy by employing local people in the franchisees and had contributed in terms of tax revenue to the government and to local government body especially and it has given people a stable paycheck every month which has boost the local economy and also attracted best talent available locally and outside local market and has absorbed the large population into the employment net and had decreased the unemployment had increased the employment level.

In USA even in the downturn of 2000 and 2001, franchises economy grew 40% when other industry was growing 26% and job growth was 12.5% compared to 3.5% in all other industries. in 2017 Franchisees earned USD 700 billion

Level of franchising development in Malaysia: Franchise industry is growing with a good and healthy speed in Malaysia with contribution of RM 27 billion or USD 6.6 billion to Malaysia's GDP in 2017.

40% of Malaysia market is captured by foreign franchises and franchise market is regulated by Malaysian Franchise Act, 1998 and Franchises are to be registered with Registrar of Franchise. Over 60% of Malaysian population is Muslim and their Halal meat is eaten and it is certified by JAKIM(A halal certifying agency)