Franchises Case Study

1)   To what extent is a franchise opportunity a true reflection of what it is like to set up and run a business?

            Setting up a business can be very similar to setting up a franchise however; there are a few differences that the entrepreneur has to take into consideration before making a decision. A franchise is a form of business ownership whereby a person or business buys a license to trade using another firm’s name, logo, brands, and trademarks. In return for this benefit, the franchisee pays a license fee to the franchisor. The franchisor, however, provides the marketing plan, training, and the products in order to ensure that their reputation is not hindered. In an individual business, the entrepreneur has to come up with everything and provide the all of the money for the start up costs. Similarly, the franchisee has to pay for the outlet itself but the risks of failing are way smaller. Therefore, setting up a franchise can be very different from setting up an individual business however; the daily running of them are similar since the franchisee controls and organizes the franchise as they see best in order for them to earn the highest profit attainable, a goal shared by individual businesses as well.

 

 

2)   Use the Forbes site and the Business of Baseball site to do some research on the financial position of the different baseball franchises in the United States and Canada. Using the data, suggest which teams are the most vulnerable to seeing their franchise sold to a rival bidder such as Portland, Oregon.

A team that is the most vulnerable to seeing their franchise sold off to a rival bidder is a team like the “Tampa Bay Devil Rays” as they are not doing well in their games since they rank number thirty in the top thirty teams of the league. However, they have an operating income of $27.2 million annually, the third highest amount in the league, indicating that they are doing extremely well financially. Consequently, they are more likely to be sold off to a rival bidder as the team would earn them more income and the fact that the team isn’t doing very well in their games can benefit the bidder through things like sponsorship, reputation build up, and other such things.

 

 

3)   Imagine a situation where the English Soccer Premier League became the franchisor as in the case of MLB Inc. How might the Premier League seek to use this position to expand the growth of the ‘brand’? What implications would this scenario have for clubs in the League and outside it (i.e. those in the championship)?

If the English soccer Premier League became the franchisor, it could easily use this position to expand the growth of the ‘brand’ by introducing new teams from around the world. This global awareness and international presence would benefit the franchise, as it would enhance their reputation and help them earn more profit, since the franchisees would have to pay an initial fee and a royalty payment. This would consequently give them the benefit of economies of scale.