Question

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

subject: Basic Entrepreneurship

Answer 1

History

Franchising hasbeen long standing concept across 80 nations and has witnessed tremendous growth rise since 1920 era and has seen uptick till 1999 and thereafter globalization and franchises like Mcdonalds, PizzaHut, Burgerking with one of best innovative models of profit sharing with business expansion based on multi domesticsstrategies. History also relates to Middle Ages where feudal lords sold rights of selling to people in pursue of profit by sharing bonds. Recently, franchising has been pioneer of growth models for small scale cafes anf restaurants and malls.

Importance

Flexibility in independence, continous monetary support from franchisors, stable and secured refinances, umbrella brandibg and production supportt helping major players like Mcdonalds to have continued funding and establish long term supply chain management and logistics and qualified assurance and lean management systems. Although there are disadvantage of such model which include restrictions and resistance to innovation if it has less returns on capital and micromanagement by franchisors in new ways of expansion across multiple markets.

Situations in Malaysia

Franchising is been great model here with royalty and advertising fee being low at 5% and varuous forms of tax incentives by state government . Market is well concentrated with multiple players and has continued levels of collaboration with franchisors for support.

Good funding capital and relaxed capital control norms associated with easier government regulations and ease of doung business and scalability make Malaysia an attractive destination for franchise opportunities. Also the socio cultural mindset for Entrepreneurship and back up of FDI also opens up various avenues.