‘The purchase of an internationally recognised fast food franchise guarantees business success.
CAMBRIDGE
A level and AS level
Year Examined
May/June 2019
Topic
Franchising & Entrepreneurship
👑Complete Model Essay
The Purchase of an Internationally Recognised Fast Food Franchise Guarantees Business Success. Discuss.
The statement that purchasing an internationally recognised fast food franchise guarantees business success is a bold claim that requires careful consideration. While there are undeniable advantages to operating under the umbrella of a well-established brand, business success is a complex equation with numerous contributing factors beyond mere brand recognition.
Advantages of a Franchise Model
Franchising offers a compelling model for aspiring entrepreneurs, particularly in the competitive fast food industry. Brand recognition is a powerful asset. Consumers are more likely to patronize a familiar name like McDonald's or Subway, associating it with consistent quality and service. This familiarity translates to a lower risk perception for the franchisee, as customers are already predisposed to the brand.
Franchisors provide invaluable training and support, equipping franchisees with the necessary tools and knowledge to operate the business successfully. This includes operational procedures, marketing strategies, and even staff training programs. Furthermore, franchisors often negotiate favorable deals with suppliers, ensuring consistent quality of ingredients and supplies at competitive prices.
Marketing and advertising are often centralized and managed by the franchisor. This not only reduces the franchisee's financial burden but also provides access to sophisticated national and international campaigns that would be otherwise unattainable.
The Limits of Franchise Guarantees
However, the notion of a guaranteed success is misleading. While a recognized brand provides a head start, it doesn’t eliminate the need for effective management. Franchisees are responsible for the day-to-day operations, including hiring and managing staff, ensuring customer satisfaction, and maintaining hygiene standards. A poorly managed franchise, even with a powerful brand behind it, is unlikely to succeed.
The initial investment required to purchase a franchise can be substantial, often requiring significant loans. Franchisees are also obligated to pay ongoing royalties and advertising fees, impacting profitability. External factors like economic downturns or changing consumer preferences can also negatively impact the business regardless of the brand.
Consider the case of Krispy Kreme. Despite its initial success, overexpansion and changing consumer preferences for healthier options led to financial struggles. This exemplifies that even globally recognized brands are not immune to market forces and poor strategic decisions.
Defining Business Success
The concept of “business success” is subjective and varies from one individual to another. Is it simply short-term profitability, or does it encompass long-term growth and expansion? Some franchisees might prioritize a steady income stream, while others aim for rapid expansion and increased market share. These varying definitions of success necessarily impact how one evaluates the guarantee of a franchise model.
Conclusion
In conclusion, while an internationally recognized fast food franchise offers numerous advantages, including brand recognition, established systems, and ongoing support, it does not guarantee success. Effective management, adaptability to changing market conditions, and a clear definition of individual success are crucial factors that ultimately determine the fate of a franchise. Therefore, the statement that a franchise guarantees success is a simplification of a complex business reality. While it provides a strong foundation, the onus of success still rests heavily on the franchisee's ability to manage and adapt within the provided framework.
‘The purchase of an internationally recognised fast food franchise guarantees business success.
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A-Level Business Studies Essay: "The purchase of an internationally recognised fast food franchise guarantees business success."
This essay aims to critically discuss the statement "The purchase of an internationally recognised fast food franchise guarantees business success." It will explore both the advantages and disadvantages of franchising, providing a balanced argument and analysing the factors that contribute to the success or failure of a franchise.
Advantages of Franchising
There are numerous advantages to buying into a franchise, particularly one with established brand recognition:
- Established Brand and Product: An internationally recognised fast food franchise already enjoys a strong brand reputation and a popular product line. This gives the franchisee a significant head start, attracting customers who are familiar with the brand and its offerings.
- National/International Promotion: Franchisees benefit from the franchisor's marketing campaigns and advertising, often at no or minimal cost. This saves significant resources and provides valuable exposure to a wider audience.
- Training and Advice: Franchisors provide comprehensive training programs to equip franchisees with the skills and knowledge needed to operate the business successfully. Ongoing support and guidance are also typically offered.
- Protected Location: Franchisors often have established territories and protect their franchisees from direct competition within designated areas.
- Guaranteed Supplies: Franchisors typically provide high-quality, consistent supplies of food and ingredients, ensuring a uniform experience for customers across all franchises.
Challenges and Considerations
While franchising offers significant benefits, it's important to recognise that it doesn't guarantee success. There are several challenges and considerations for franchisees:
- High Initial Costs: Franchises often involve significant upfront costs, including franchise fees, equipment, and initial inventory. This investment may take time to recoup, potentially delaying the realization of profits.
- Effective Management: Franchisees must still be capable of effectively and efficiently managing the business. This includes hiring and training staff, maintaining quality control, and ensuring customer satisfaction. Poor management practices can negatively impact the success of the franchise.
- External Factors: Economic downturns, changes in consumer tastes, and competition from other businesses can all negatively impact a franchise. Franchisees have limited control over these external factors.
- Dependence on the Franchisor: Franchisees are bound by the terms of the franchise agreement, meaning they have limited autonomy and are dependent on the franchisor for support and guidance. This can sometimes lead to conflicts or limitations on the franchisee's ability to adapt to local market conditions.
- Defining Success: The definition of "business success" can vary. Short-term profitability may be achieved, but long-term sustainability, expansion, and brand equity are equally important factors to consider.
Evaluation and Conclusion
Ultimately, the purchase of an internationally recognised fast food franchise does not guarantee business success. While the advantages of franchising are significant, franchisees must possess the necessary business acumen, management skills, and adaptability to navigate the challenges and uncertainties associated with running a business. Success requires more than simply buying into a well-known brand. Franchisees must be proactive, embrace innovation, and constantly strive to provide exceptional customer service to thrive in a competitive market.
Therefore, the statement "The purchase of an internationally recognised fast food franchise guarantees business success" is an oversimplification. While it offers a valuable foundation, success ultimately depends on the franchisee's own capabilities, the changing dynamics of the market, and the ability to adapt and evolve to meet evolving customer needs.
Tips for Writing Your Essay
- Structure: Clearly define your argument and present it logically, using a structured approach with clear introductions, body paragraphs, and a conclusion.
- Evidence: Support your points with relevant examples and data to strengthen your arguments. Use theories and concepts from your A-level Business Studies syllabus to enhance your analysis.
- Evaluation: Go beyond simply listing advantages and disadvantages. Critically evaluate the statement, exploring the extent to which franchising guarantees success. Consider counter-arguments and alternative perspectives.
- Clarity and Conciseness: Use clear and concise language, avoiding jargon. Make sure your essay flows smoothly and is easy to understand.
- Proofreading: Before submitting your essay, proofread it carefully for grammar and spelling errors.
Extracts from Mark Schemes
The purchase of an internationally recognised fast food franchise guarantees business success. Discuss this view.
Answers could include:
An understanding of the advantages of engaging in business activity via a franchise.
Advantages of using the name and logo of a successful business offers such opportunities as:
- More chance of business success when using an established brand and product.
- National / international promotion is available, often at nil or limited cost.
- Training and advice offered by franchiser.
- Location of business protected.
- Supplies of food guaranteed in terms of quality and consistency.
However, is a franchisee guaranteed success?
There are significant costs to pay before ‘profit’ is achieved.
The business still needs to be effectively and efficiently managed – e.g. quality of serving and food production employees – is there managerial capability – what happens if the franchise business suffers as a result of recession in particular companies – or reputation suffers – or customer tastes change?
It also depends on what is meant by ‘business success’ – short-term – long-term – profits – expansion?
Discussion of points referred to in bullet points 6 and 7 offer opportunities for candidates to make evaluative comments on the provocative statement at the head of this question.
Effective evaluation is likely to be evidenced by a consideration / discussion of the extent to which business success is likely to be guaranteed by a fast food franchise and of other factors which are associated with business success.