In this final discussion, we are asked to evaluate business start-up options for Shania Jackson. Shania is a mature Christian. She has a desire of opening a coffeehouse. Shania seems to have the support of her husband, sister, and neighbor, but in varying degrees of commitment and perspectives. Shania’s husband is willing to invest capital, but not help in the day to day operations. Her sister, a new Christian is eager to participate in the business, but her husband is completely against the idea. Shania’s neighbor is a non-Christian that thinks the business has potential to be successful among the various religious groups in the community. This paper will include a discussion and analysis of Shania’s options on the business type she should
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One specific advantage for a start-up company is that it gives instant notoriety to the business. “A competitive franchise system can provide franchisees with strong brand name, economies of scale, and efficient execution of the franchise system (Falbe and Welsh 1998 as cited in Chiou, 2004). Perhaps, the best advantages of franchises are that it mitigates the risk and uncertainty of a small business. To aide Shania in making an informed decision, it is important to consider the drawbacks of entering a franchise. Arguably the three most disadvantages are independence, the initial and ongoing costs, and operational risk beyond the owner’s control. The loss of autonomy is a fundamental disadvantage, especially regarding creative control. There is no room for a business owner to explicitly change direction when pushing someone else’s brand name. The owner must agree to certain restrictions when a small business becomes part of an existing franchise, meaning an owner cannot just change the business of the franchise (Schizas,2013). The second major disadvantage is the cost of buying into a franchise and ongoing fees on sales or minimum purchases of products. Shania will need to meet these on-going requirements regardless of whether her business is making a profit or not. In considering the third crucial disadvantage, careful thought must be given to the culture of the Franchise. The far-reaching implications to a franchise failing to meet its obligations or the franchises susceptibility to lawsuits can be fatal to a small business. “Franchisees risk being tarnished by the failure of franchisors” (Schizas,2013). The answer to whether Shania should franchise or not franchise lies in what is more important to Shania. Does she desire to have instant, potentially superficial, notoriety or long-term trust and customer relationship building that can take years to achieve. I recommend that she keep her autonomy and creative and
One specific advantage for a start-up company is that it gives instant notoriety to the business. “A competitive franchise system can provide franchisees with strong brand name, economies of scale, and efficient execution of the franchise system (Falbe and Welsh 1998 as cited in Chiou, 2004). Perhaps, the best advantages of franchises are that it mitigates the risk and uncertainty of a small business. To aide Shania in making an informed decision, it is important to consider the drawbacks of entering a franchise. Arguably the three most disadvantages are independence, the initial and ongoing costs, and operational risk beyond the owner’s control. The loss of autonomy is a fundamental disadvantage, especially regarding creative control. There is no room for a business owner to explicitly change direction when pushing someone else’s brand name. The owner must agree to certain restrictions when a small business becomes part of an existing franchise, meaning an owner cannot just change the business of the franchise (Schizas,2013). The second major disadvantage is the cost of buying into a franchise and ongoing fees on sales or minimum purchases of products. Shania will need to meet these on-going requirements regardless of whether her business is making a profit or not. In considering the third crucial disadvantage, careful thought must be given to the culture of the Franchise. The far-reaching implications to a franchise failing to meet its obligations or the franchises susceptibility to lawsuits can be fatal to a small business. “Franchisees risk being tarnished by the failure of franchisors” (Schizas,2013). The answer to whether Shania should franchise or not franchise lies in what is more important to Shania. Does she desire to have instant, potentially superficial, notoriety or long-term trust and customer relationship building that can take years to achieve. I recommend that she keep her autonomy and creative and