E N T R E P R E N E U R I A L
O P T I O N S :
START-UP, BUY-OUT OR
FRANCHISING
WEEK 4 - MODULE 4
Learning Objectives:
Interpret the entrepreneurial process
and options of setting up a business
Identify the process of buying an
existing business;
Analyze the concept of franchising
Illustrate franchising and how this
form of business ownership woks
A. CREATING A NEW
BUSINESS / START-UP
A method of establishing a business from scratch.
The route that usually comes to mind when
discussing entrepreneurship.
Most of the entrepreneurs are now starting a new
business using their creativity and iinovation.
ADVANTAGES OF CREATING
A NEW BUSINESS
1. Possibility of directing the company toward your personal
objectives.
2. You have complete freedom in picking your target market.
3. Personalize your policies and procedures, as well as the hiring
process.
4. Avoid the “goodwill” cost of purchasing an existing company,
as well as the risk of unknown or contingent liabilities.
5. The ability to choose the business concept.
DISADVANTAGES OF CREATING A NEW BUSINESS
1. It contains the greatest amount of uncertainty about market demand
for your new product or service.
2. Invest time and effort in developing a brand, increasing customer
loyalty, ironing out the kinks in new processes and procedures, and
reaching break-even sales.
3. Investment risk
4. There’s a good chance that the time lag between your investment and
cash flow will be excessive.
5. High risk and high-potential
6. There are many unknowns and unpredictable elements
B. BUYING AN EXISTING
BUSINESS (BUY-OUT)
01 Acquiring an existing business
May decide to purchase only the assets,
02
or an entrepreneur may buy the business
as a whole.
Why Acquire a Business:
1. There are already available personnel with know-how.
2. Facilities and technology are already available.
3. There is an existing product with an existing market.
4. The location of the business if favorable.
5. The business has established relationship with banks and
trade creditors.
6. The business is generating profit.
7. The business has existing goodwill.
C. FRANCHISING
Is a marketing system based Is a form of business
on a legal agreement wherein organization in which a firm
that already has a successful
one party (franchisee or
product or service (franchisor)
franchiser) is given the right
licenses its trademark and
to handle the business as an
method of doing business to
independent owner, but it another business or individual
must abide by the terms and (franchisee) in exchange for a
conditions specified by franchise fee ongoing royalty
another party (franchisor). payment.
FRANCHISE - an agreement whereby an independent person is given a
exclusive rights to sell a specified good or service.
FRANCHISOR - refers to an entity that owns the franchise name and
distinctive elements (such as patent, trademark, signs, and symbols) which
grant others the right to sell its product.
FRANCHISEE or FRANCHISE BUYER - the entity that buys to operate
the business using the name, product, trademark, service mark, product,
and business format of the franchisor under the terms and conditions of
the franchise contracts.
FRANCHISING CONTRACT - refers to the legal document involving two
parties (franchisor and franchisee) specifying the obligations, primarily of
the franchisee, and the condition under which the latter will conduct the
business.
TYPES OF FRANCHISING
01 PRODUCT AND TRADEMARK FRANCHISING
Is an arrangement under which the franchisor grants the franchisee the right to
buy its products and use its trade name.
02 BUSINESS FORMAT FRANCHISING
An arrangement under which the franchisor provides a formula for doing business
to the franchisee and training, advertising, and other forms of assistance.
The franchise is granted the right to use the franchisor’s entire marketing system
and continuing assistance and guidance.
01
THANK YOU
