Franchising in business refers to a long term cooperative relationship maintained between two entities. Where the franchisor gives the right to his franchisee’s to use the business model and brand of the franchisor for a specific period of time on basis of an agreement to do business. The franchisor provides a privilege to his franchisee to use the developed products, trade mark, production process, marketing methods, service, brand name, raw materials, training and development manuals and business operation models for a nominal fee called as the management fee which comprises of an royalty for the trade mark, reimbursement for the training and advisory services and a percentage of individual business unit sales …show more content…
during low sales performance of business.
Create a unique, innovative, exciting menu.
Royalty: 7% of gross revenues or a minimum of $957, whichever is greater per month, instead of 9.5 %.
BATNA
The best alternative we can expect if we fail to reach agreement at the bargaining table with our competitor:
Look for other fast food franchise like Domino’s which is equally reputed as Pizza Hut and with royalty at 5%.
We can rent the space allocated for fast food franchise for some other purpose like Adults or Kids play arena in order to attract the crowd.
Negotiate to reduce the royalty to 4 % if not negotiate to extended the franchising term to 30 years from 25 years.
Start up our own fast food center with a small amount of investment and small amount of profit motive so as to avoid or mitigate any uncertainties that may occur during its business operation.
NEGOTIATING TEAM
The negotiating team …show more content…
NEGOTIATION PLAN
Target: minimum royalty of 7% to maximum of 7.5%
We Conducted research about Pizza Hut to Learn about the company and the individuals with whom we are negotiating and also learn more about the competitive advantage and the main needs of the company about financial and controversial issues that can affect the outcome of a negotiation, like payment terms, controversies and budgets.
Have a complete knowledge on our objectives as well as the objectives of the other parties involved. Take into consideration acceptable outcomes and the worst agreement terms that we might have to accept during its operations. On the other hand learn about the other party’s objective and outcomes they may be willing to accept.
Provide complete information to the other party regarding our terms and condition of the deal.
Know the level of each authority delegation of our negotiating team which consists of Ms Sharon David, Mr Roshin Thomas, Mr Varun Gowda, Mr Zain Khan and Mr