Business format franchising: making the right choice
Article Abstract:
Although franchising is an effective way for some businesses to expand, it is not an appropriate method for all types of organizations. An existing retail chain with profitable branches is a likely candidate for franchising, and a service operation with a strong market identity could also be franchised. A manufacturing company would be better served by licensing agreements than franchises, unless production can be limited to small lots and the firm has an established consumer sales operation. A large company with a fixed management structure usually lacks the flexibility to run an entrepreneurial business effectively. An unsuccessful chain operation is especially unsuitable for franchising; selling outlets to raise money will not help an unprofitable concern, but will create more problems.
Publication Name: The Accountant's Magazine
Subject: Business
ISSN: 0001-4761
Year: 1986
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The management buy-in
Article Abstract:
The management buy-in is an alternative approach to improving corporate performance and increasing the return to stockholders. The buy-in entails a small management team from outside the firm purchasing its way into the company, usually with the help of other outsiders. Key buy-in ingredients are: strong management skills; a desire on the part of those buying-in to get a personal business stake; an underperforming target company; and the support of external investors. The main rule for the buy-in team to follow is to avoid over-paying. The buy-in team should also do a significant amount of 'homework' on the firm's business and its shareholders. Buy-ins should be structured to allow investors to roll over interest in the firm and keep the liquidity offered by a stock market quotation.
Publication Name: The Accountant's Magazine
Subject: Business
ISSN: 0001-4761
Year: 1987
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The sponsored spinout
Article Abstract:
Sponsored spinouts are the development of new companies by existing ones, based on the talents of certain entrepreneurial employees of the old corporation. Among the benefits realizable from sponsored spinouts are: (1) allowing management personnel to work on items of interest to them, (2) enabling the parent company to be at the forefront of technological change without the risks usually associated with this position, (3) the corporation spun off will be small enough to take advantage of niche marketing opportunities, and (4) a new investment opportunity for venture capitalists. The benefits of sponsored spinouts indicate that this form of incorporation may become as popular in the next five years as management buyouts have been during the past five years.
Publication Name: The Accountant's Magazine
Subject: Business
ISSN: 0001-4761
Year: 1986
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