Fast Food Nation
Competition is today a determining factor for the rise of numerous food industries globally; however, in its essence, fast food chains currently are experiencing this problem at a skyrocketing speed. As a result, consumer battles have emerged regardless of the restaurants external or internal determining factors (Schlosser). For instance, in 2011, online platforms created a buzz concerning fast food establishments rocked the media. Some of the prevailing data collected by google search engine was “Fast Food Fight”, “Time”, “Fast Food Wars” and “Burger Wars” This way researches were conducted on consumer basis and pertinent restaurants on how to conceptualize “fast food” and diminish the ever-intensifying competition among renowned fast food chain industries as well as achieve globalization initiatives. Besides, consumers who wished to access fast food in a limited time faced impairments from its producers; foremost geographically, this establishments bestowed in the food industries were nonstrategic and most established brands in the market were facing constant combats from new hotelier entrants making the market saturated without topnotch fast food delivery. For these reasons, the focus of this paper is a dedication towards the introduction of franchising concept, provision of quality business models to leverage franchising and discussion using examples of various franchised companies while aligning fast food industry in an international focus; therefore, is franchising in the fast food industry a sound business investment?
Theoretically from a scholarly perspective the term franchise reflects a contractual agreement-regarding distribution of goods and services under intellectual property licensing and rights(brand, trademarks, logo) between the franchisor(orchestra of the network) and franchisees(buyer of the business format as an asset) on a defined web (Dant, 196). Likewise, fast foods are meals prepared for profit entity-food chains, including restaurants, outlets, or stores in the food industry. Currently, the term franchising is underscored in many investments from food industries, groceries, hospitality entities, and fitness or hair cutting solutions in a bid to meet their vital consumer needs. Despite franchising numerical entities, variations still occur regarding its rollout plan and implementation because of different strategic denotations experienced. For example, Russian “Teremok”(Dant, 196) operating more than 250 restaurant chains dealing with traditional course meals, insistently rejects franchising its entity to more cities across the country. While aforementioned may be the case, prominently established McDonald’s, KFC, and Burger King, in this case, have championed on the franchising business model.
Conversely, companies face different factors towards maximizing consumer access to their goods and business -in this case, fast food entities are impaired by geographical setting/ distances from their target market while fast food is highly perishable. As a result, inter-firm relationships emerge in the form of franchising where affiliations sprout to cater for customers in different zones. Necessarily, meeting another firms demands may not be entirely comfortable as stated in franchising dominations, this way, “four ideal typologies”(Dant, 197) need to be implemented before forging ahead to franchise an entity. Foremost, is the “satellite production” where standardization or customization of goods and products by parent companies(supplier) are regulated by the buyer under contractual agreements that are unilateral. Secondly, under “active engagements”(Dant, 197), two parties form contracts resulting in buyer-supplier affiliations, which are mutual as communications between the entities are linear, and product risks are absorbed. Thirdly “sub-ordinate co-operation” (Dant, 198)consists of establishments dealing in the same product line, though as competitors these establishments seek to maximize profits from same ‘customers’ for example; fast food entities in the same network may be lent machinery to leverage their productivity. Lastly, the “independent cooperation”(Dant, 198) seeking to link craft-based entities targeting differentiated markets with mass production establishments to meet mass customization.
Similarly, it is beyond such relationships that an absolute franchising business models are formed, wherein, partakers are legally independent but target the same customers under a single brand name and dependency is bilateral. A franchisee has its sources in relevance to suppliers, food ingredients, workforce, and furnished items of furniture. In a like manner, franchising holds its characteristics which include; legal independence, long-term cooperation, entrepreneurial independence, franchisor provides the business format at a fee, right to control as well as directions by the franchisor and personal commitments by the franchisee(Dant, 205).
According to Hemplmann on “optimal franchising”(Dant, 205), he sought to distinguish characteristics as mentioned earlier to suit fast food franchising. Succinctly, through goods franchising, there is a differentiation between goods and services in a franchised network. Besides, through blueprinting, fast food entities seek target markets through outlets and the same comprehensive marketing ideology. For instance, McDonald’s where it there is a distinction between the manufacturer and center-service provider relationship in its franchised system; in this case the franchisor is portrayed as a service center where customer preferences emanate and delivered through singular other service providers. Indeed, this is a form of “master franchising”(Dant, 208) through which new contracts are formed to allow the franchise to distribute franchised concepts regionally.
Discussion
According to McDonald, the founder of its franchise system, “No one of us is as perfect as every one of us.” The underlying idea of that single quote is: Franchising optimally creates a win-win situation in which the franchisor and franchisee try to maximize their profits while maximizing others profit too. The specific advantages & disadvantages outlined in different literature depend upon the kind of franchising being addressed. For example, in the industry of fast food, the following pros and cons face both franchisee and the franchisor.
In comparison, a franchisor’s advantages are that they are dynamic with their partners in the system for expansion, overhead accumulated is based on franchisees, risk accrued is typically faced by the franchisees, there are no liabilities incurred by franchisees affecting them since they are independent and that total revenue is to be treated according to turnover. However, disadvantages appended on the franchisor include; having low authority over the partner’s sales personnel, success is based on the quality of franchisees in the network, poorly performing affiliates affect the overall brand image, and that there are less or no development of own market knowledge.
In the same fashion, franchisees are posed with advantages that come with franchising initiatives; which include the lee-way to self-employment, business risks involved while running business are relatively low, they also get to benefit from franchisors. Likewise, they adapt proved strategies of marketing, receive initiatives from franchisors such as support and consultancy and that they are typically treated as variable costs to the parent company. On the other hand, disadvantages that befall them include the high dependency upon their initiators having no scope of an individual based strategic management which may impact their flexibility and pricing policies. Besides, they also face standardization over the sale of quality fast food as well as the challenging high cost of entry.
Finding and resolution
A critical factor which makes franchisee’s start easier is the brand which is developed by the franchise. Mostly based on a nation-wide reputation and proven standards of quality which is well established in the industry. The brand must be taken care of by the franchisor, the commercials as well as advertising strategies and all activities, which decrease the franchisees’ task in the effort of complying with outlined rules and regulations upon profiting from the set brand. It should be noted that even if the franchisee is not relieved from the promotion of his outlet on a given regional, though given language, style, and logos which are sets frequently facilitate that role a lot.
Another critical issue to consider while opening a franchise on first food is the location. Investors should be careful before locating a fast food franchise basing on their intuition. A site within the outskirts of the city can be affordable but may be more remote for conveniently getting in touch with customers. However, there also some factors which may be considered being at play. For instance, a particular franchised investment thought its target upon a University campus was suitable for its franchising on fast-food. Students were the main focus to be used as employees and customers. By chance, the students were the employees and as well the customers, but they disappeared for games and long holiday vacations. By the end of every term, they had less money to spend money. Since the location had no parking authority, there were no outside customers. As a resolution to the location issue, the investment was eventually moved to another building with ample space for parking. This change of location triggered the continuity and expansion of the business. It still delivers fast food to the college and also serves non-students, who buy even at a higher price than students.
Summing up the findings obtained from the preceding regarding the franchising in the fast food industry, it can be highlighted that numerous limits holds against only a few and, given rational behavior of all involved parties’ disadvantages and controllable risk. The critical issue, that is unequivocal in whether an establishment is all around liable to firmly profit by the said various preferences or subject to the essential ramifications that can emerge from the referenced impediments, unquestionably is the coordinating of franchisor and franchisee and their fitness for the framework. In this manner, it is vital for the foundation of an establishment that the two sides invest a lot of energy and, whenever defended, different assets on checking if the franchisor’s idea and different qualities coordinate the franchisees’ thoughts and capacities and if the two substances are probably going to work well together. When this test has been appropriately tended to, the potential weaknesses can, for the most part, be handled by shared trust and unwavering collaboration.
Risks emerging from the brand taking harm, drawbacks, or general failures of the strategy are considered being general business risks faced by any enterprise, however independent or dependent it may be. It should, therefore, be noted that the disadvantages outlined in this document are part of a rather nature constructed, despite not being improbable. For example, the opportunist franchisee who willingly produces products which are low quality because he will still sell appreciates to the overall image of the brand. Critically, franchised outlets of fast food perform much better compared with their counterpart’s owned-companies counterparts when assessed by health inspections. Franchising, for the fast food industry, highly benefits both the franchisee and the franchisor.
Work Cited
Schlosser, Eric. Fast food nation: What the all-American meal is doing to the world. Penguin UK, 2002.
Dant, Rajiv P., et al. “A cross-national comparison of brand perceptions of global franchise chains in the BRICS.” Journal of Marketing Channels 23.4 (2016): 196-216.
Jou, Chin. Supersizing urban America: how inner cities got fast food with government help. University of Chicago Press, 2017.