Chain Operations and Franchising 09 24 2013 Chain Brands A business under one management or ownership 6 or more structural arrangement becomes more complex with increasing size of chain A specific identity of a business that is intentionally created through a careful combination of o Design of products o Services offered Name logo slogans signage Goal is to convey a personality for the business and consistent image in the mind of guests Ex All McDonalds look the same despite the location Multi Unit Operations Simple form a chain that has a single owner investor who has full equity stake in all units owned by the company Mixed Franchise form o Mix of ownership some units are owned and operated by the parent company franchiser and the rest are owned and operated by other owners investors franchisee Management Franchise Form o When the parent company franchisor also offers professional management services for its non company owned franchised units Brand Management Form o When a mega corporation owns multiple chain operations under a parent umbrella structure it refers to each chain operation as a brand It stressed the importance of the brand Creates distinctive brand image Differentiates each brand in the portfolio Marriot owns 17 different brands Hilton owns Hampton Inn etc Advantages of Chain Operations Market Reach reaching many markets to increase sales and thereby increase profits Economies of Scale cost advantages a company can derive because of its large size greater power to negotiate better lower rates for products and services needed from vendors Streamline Operations Standardizing products and services simplifies operations allows for standardized operating procedures SOP s too o Ex All McDonalds have the same menu so you don t have to look at a new menu every time you go to a new location Enhanced Marketing Power Increased visibility gained through greater market reach Value Added Service Operations Additional services for both customers and unit chain operations alike such as o Customer loyalty programs Hilton Honors Programs o Architectural and construction design services When building at a new location you don t have to make a new blueprint layout because the business must look the same as previous ones o Consulting services o Employee training programs Access to Finances company may have multiple options for raising money for growth Professional Management Enhanced legal requirements and complexity of operations has companies hiring professionals with a better understanding of a company s operating needs such as students graduating from hospitality management programs Disadvantages of Chain Operations Operational Constraints Standardized operations can put restrictions on franchises Financial Strain Franchises pay the parent company through royalties incentives franchise fees marketing fees and other fees o If management decides that they want to change an item on a menu you must fund for that to be done Legal Forces Complex structure of chain operations along with owner operation contacts and partnerships may created legal challenges o If it is decided that new lighting must be put into every bathroom for safety reasons some of the restaurants profit will have to go towards fixing the lighting Globalization Big Chains Commonplace today for major hospitality corporations to consider the entire global market as their potential domain Increasing globalization of the hospitality industry is reflected in the geographic profiles of large hospitality corporation o Especially in the hotel industry Hospitality Trade Associations Rating Services 09 24 2013 What is an Industry Association Member training education Opportunities for networking Member recognition and support Promotion of specific industries to the public Legislative updates Industry trends and updates National Restaurant Association Periodicals trends and more Largest restraint trade show Held every may in Chicago American Hotel Lodging Association Training opportunities in depth research and more Largest Hotel Trade Show Held usually in November in Ney York City Encyclopedia of Associations o Available in libraries o Fins associations relevant to your interests o Searchable by topic Governing documents Help associations run smoothly o Mission statement o By laws o Vision statement Food Associations National restraint Association American Dietetic Association American Culinary Association American Association of Wine and Food Catering and Institutional Management Association International Food Service Executives Lodging Associations American Hotel and Lodging Association International Hotel Association International Executive Housekeepers Association Travel and Tourism Association Tourism Industry Association of America World Tourism Association o Sponsored by United Nations Travel and Tourism Research Association Destination Marketing Association National Tour Association American Association of Travel Agents Specific Segment Associations Club Managers Association of America Meeting Professionals International Council of Hotel Restaurant and Institutional Education American Bed and Breakfast Association Rating Systems Use professionally trained inspectors Based on a system of standards and expectations American Automobile Association Uses a classification that awards diamonds Five Diamond award is the highest award less that half of one percent receive the five diamond rating Forbes Travel Guide Uses stars to designate quality Five Star award indicated a world class dining or lodging experience Operations Management Management 09 24 2013 Identifies those in charge of directing business affairs o Group of people who have the authority and responsibility to oversee the entire operation Management becomes a service o From the sales of products and services the operation itself becomes and additional product that which pays its employees managers and owners The process of getting tasks accomplished through people A person who is responsible for the work of others How managers can assign work effectively Consider the availability of the employee and weather or not this is the right person for the job Use work assignments as means of developing people Communicate to the person what needs to be done If many steps are involved follow up oral communication with a note Ask rather than tell Communications Match your language to the employees training Give assignment in logical sequence Be considerate Talk deliberately
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