Franchising Starbucks - 3137 Words

We have been required to do a research on franchising of Starbucks Coffee in Malaysia. Below is our report on it. The term franchise originated from a French word, meaning â€Å"free from servitude.† A franchise can be defined as a legal agreement in which an owner (franchisor), agree to grant rights or privileges (license) to someone else (franchisee) to sell the products or services under set specific conditions. Speaking of franchises, it is usually referring to business format franchises. Such a franchise is essentially a business clone. But there are many varieties of business arrangements within a franchise system. According to a publication by IFA (International Franchise Association) Educational Foundation, all of those†¦show more content†¦To date, the company has 88 outlets in Malaysia (58 in Klang Valley, 11 in Penang, 4 in Johor Bahru, 1 in Pahang, 2 in Malacca, 2 in Negeri Sembilan, 1 in Perak, 2 in Kedah, 3 in Sabah, 1 in Sarawak and 3 in Genting Highlands). Table 1.1 Growth of Starbucks Coffee worldwide Year Starbucks Store Total at Fiscal Year End Growth (%) 1971 1 - 1987 17 94.1 1988 33 48.5 1989 55 40 1990 86 36 1991 116 25.9 1992 165 19.6 1993 272 39.3 2994 425 39.8 1995 677 37.2 1996 1015 33.3 1997 1412 28.1 1998 1886 25.1 1999 2498 24.5 2000 3501 28.6 2001 4709 25.7 2002 5886 20 2003 7225 18.5 2004 8569 15.7 2005 10241 16.3 2006 12440 17.6 2007 15756 21 *source: Starbucks Historical Summary of Store Counts, http://starbucks.com.my/en-US/ Franchising provides the means for expansion of a business by providing opportunities to franchisees, primarily by territory expansion agreement. Franchise provides rapid expansion with limited capital to a company. The franchisors doesn’t need to have a lot of capital to expand their business world wide, they provide the image and all the methods of doing the business while the Franchisees provide the bulk of capital by buying the ideas from the Franchisor. Franchise is also a sophisticated form of capital raising method. No other form of capital rising allows a business to expand without giving up equity, paying interest making lease payments. The franchisor may choose to incest excess capital for the benefit of theShow MoreRelatedFranchising Benefits And Strategies Of Franchising1410 Words   |  6 PagesFranchising It is said that today there is a total of 750,000 franchise establishments within the U.S. itself. Franchising is a long-term agreement between two parties, and is when the franchisor grants the franchisee the right to use a trademark or trade name in a business process. In a franchise agreement the franchisee would in most cases purchase or lease the trademark or logo from the franchisor. 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