Advantages and disadvantages of 1-800-Got-Junk franchisees’ experience
The daily operations at the company headquarters followed a routine of a short meeting between the CEO, Brian Scudamore, and staff which are centered on discussions about important daily data and keynote addresses from the CEO on how to attain set goals. -1-800-Got-Junk Company runs the most successful franchise businesses as a result of its focus on franchise partnership development and support. A franchise partnership with 1-800-Got-Junk Company brings forth the following benefits:
- Success is more certain because of the 94% satisfaction rating policy that the parent company continuously pursues.
- Franchise partners enter into a successful business system that offers comprehensive support in prime areas such as training, coaching, field visits, and other benefits from the national commercial alliance developed by the mother company.
- The agreement entered into remains secure and any major changes while the contract is operating do not affect the contract; this is left to the franchisee to decide whether to adopt the new changes or not.
- 1-800-Got-Junk Company nurtures a business environment in which the participation of all partners is encouraged. As such the partners are always motivated and more bonded to the mother company. In Scudomore’s words; it is putting all these brilliant minds and saying “let’s innovate together” (International Accounting Standards; IAS-16). Further, to make this much easier the mother company runs an extensive call center from where all calls are handled.
- The company network developed an umbrella body (franchise advisory council) which is a group of 6 partners elected by the others and mandated to collect feedback from their respective regions, summarizing and then meet the management at least two times a year to discuss improvement plans.
Why 1-800-Got-Junk changed its franchisees’ territory sizes
On the other hand, the 1-800-Got-Junk company system presents a few challenges to the franchise partners. These include; 1) overregulation of the franchise partnership. The structure of 1-800-Got-Junk is run in a very standardized routine thereby leaving little room for the individual partners to increase or improve regional performance. This denies the franchisees the opportunity to be their boss an attribute of most small businesses. 2) it’s costly as it charges ongoing royalty of 8% per dollar earned cutting on profits to the franchisees.
The change of franchisees’ territories emanated from the increased number of franchise partners and consequently increased tasks in the existing systems. This was captured in Scudermore’s statement that “there were too many materials, and partners wanted an updated website.” Further, he hinted that this would form the basis for changes during the year. Following this, the managers submitted their action plan to the franchise alliance council who then communicated to the franchisees the intention to restructure territories.
I believe that 1-800-Got-Junk Company had at its disposal a better communication technique than the one it rolled out. Given the gravity of the matter (changing of franchisees’ territories) and the increased number of franchise partners it was necessary to negotiate with the entire group which could then unlock health deliberations and eventually a resolution. This would give better results since all partners feel part and parcel of the decision making process. It will also accord them the opportunity to learn the pros and cons of implementing the new procedures and therefore showing more cooperation and reduce discontentment.
Communication of changes of territory sizes
I commend 1-800-got_Junk Company on the exhaustive procedures of goal setting and data collection. The gap between the franchiser and the franchisees is filled with a 6 member council (FAC) which is mandated to collect and analyze data from all regions after which they meet with 1-800-Got-Junk Company top management for final decision making. This process draws its strong points from the democratic election of the FAC members. Furthermore, the top leadership greatly involves the partners In terms of input in the decision process. This is emphasized by the CEO who simplifies the role of the franchise partners in his as “let’s innovate together.” Also, since the company runs a central call center collecting data, customer relations, advertising efforts, and implementing decisions generally is done with much ease.
How 1-800-Got Junk is capitalized
Capitalization in accounting is used to refer to Assets tangible or intangible in value and don’t fall into components of other capitalized assets. According to IAS assets that form part of an entity’s capitalization are those that are used in the operation of its activities. Further, the IAS stipulates that assets should have a useful life of a year or more. 1-800-Got-Junk Company by the nature of its operations has the following capitalization base. Its tangible assets include; 1) trucks which are used to ferry Junks from homes to the company. 2) Buildings where the corporate offices and recycling plants are based. 3) Equipment that is used to process the junk collected, and also equipments at the call center (electronic wares such as computers). 4) The royalties that the franchisees pay (8% per dollar earned). On the other hand, intangible assets would include: 1) trade secrets; that is customer lists and recycling methods. 2) Goodwill 3) copyrights and trademarks (intellectual property.
Reference
International Accounting Standards; IAS-16. (1998). Fixed Assets: Property plant and Equipment. Web.