Franchising study

Case Study on Franchising
To what extent is a franchise opportunity a true reflection of what it is like to set up and run a business?
Setting up a business, and setting up a franchise can be very similar and different at the same time. The buyer will need to be aware of several major differences that are necessary and/or vital to the decision process.
When a franchisee buys the rights to set up a franchise, they are buying rights to use the franchisor’s trademark and model. They therefore don’t have to come up with their own ideas for the business; the logo, product, trade name, equipment etc. are already provided. The franchisee also will not have to exhaust money on advertisements as, the franchisor takes responsibility for general marketing (e.g. McDonalds’ national ad campaigns).
Apart from that, however, running a franchise is very similar to running an individual business. The franchisor controls the individual selling price of its goods, (however the franchisor generally gives a suggested sell price of its products). The franchisee has the sole responsibility of, insuring that the quality of the product is in decent condition. In addition, it is up to the franchisee to conduct and organize their franchise in such a way that it earns a profit. Thus, a franchise is generally a decent reflection of what it is like to operate a business not however, how to set up an un-established one.
Use the Forbes site and the Business of Baseball site to do some research on the financial positions of the different baseball franchises in the United States and Canada. Using the data, suggest which teams are the most vulnerable to seeing their franchise sold to a rival bidder such as Portland Oregon.
Teams like the Tampa Bay Rays or the Chicago Cubs have a higher probability of being sold to a rival bidder than, the Boston Red Sox or the New York Yankees. This is because they rank in the lowest tier of the top 30 teams of the league. This is ranking, is of course a reflection of how they fare in their games, which obviously is not very well
The Tampa Bay Rays are having success in the financial sector of baseball; they have an operating income of 27.2 million dollars annually (the third highest amount in the entire league). Therefore, a bidder would be more likely to buy them as opposed to the Pirates which sufficed to say are not doing well financially. For the potential bidder, the Rays are more attractive because, they have the potential to earn the buyer more income. The fact that the team isn’t doing all that well competition-wise can work to the bidder’s advantage in negotiation e.g. sale price and/or minimum bid price.

Imagine a situation where the English soccer Premier League became the franchisor as in the case of MLB Inc. How might the Premier League seek to use this position to expand the growth of the ‘brand’? What implications would this scenario have for clubs in the League and outside it (i.e. those in the Championship?)

The Premier League might seek to use this position as an opportunity to introduce Americans/Canadians to Premier League football. The Premier league can dual market both franchises e.g. (Market baseball in England and, Football in America). Thus, allowing potential interest to fester which could in turn lead to a larger income total/turnover.
Several questions would arise however in regards to potential baseball franchises in England/ football franchises in America. These franchises would only be able to compete, if there was a fully functional league in both countries e.g. a league of twelve or more teams, broken down into two divisions. These two divisions would compete in a playoff ultimately resulting in a champion. The champion of said league would then be pitted against, the champion of the other country in an “Intercontinental Championship match”. This would allow a greater amount of revenue for the Premier League/MLB because; it would be an internationally televised event allowing an even greater customer base/market.
Lastly, there would be the need to regulate the amount of money spent on players for the Premier League baseball team. With such a large amount of income, the franchisor would be able to acquire virtually any player they desire. This would cause baseball to become a truly one sided game then. It would be necessary for the MLB to introduce a full salary cap, as opposed to the Luxury Tax now in effect. This regulation would allow for a “level playing field”.