Answer ALL THREE questions in the following case study. $($Each question worth for $20$ Marks$)$

Case Study: The Appeal of Franchising

Neil Erlich knew that he wanted to be an entrepreneur when he helped start a contracting business when he was just $14$ years old. During his junior year at Sonoma State University, Erlich, with help from his father, a corporate executive, began investigating franchise options that would suit his interests and skills. They honed in on the automotive service industry and reviewed the FDDs of several franchises, including Meineke, Jiffy Lube, and Midas, before settling on Express Oil Change. Erlich was particularly impressed with the support that Express Oil Change offered its franchisees. When Erlich graduated with a business degree, his father put up $$375,000$ to help him purchase and set up the $$1\mathrm{.}5$ million franchise operation. Erlich, who is the youngest franchisee in the Express Oil Change system, sees the franchisor$$s support as one of the greatest bene$-$ fits of choosing to open a franchise rather than an independent business of his own. $[$The franchisor$]$ is there for you,$$ he says. $$It$$s very comforting.$$

Like Erlich, a growing number of college graduates and twenty$-$something adults who are disenchanted with the prospects of a dull job in the corporate grind are looking to franchising as a promising career choice. Indeed, franchising is attracting people of all ages and backgrounds, from corporate dropouts and military veterans to retired baby boomers and corporate castoffs. $$People say, $$I put $20$ years into a company, and because they ran into some tough times, they let me go$,$ explains Ray Titus, head of the United Franchise Group. $$They think, $$Do I want to put myself into a position where I may get laid off again?$$ Instead, they take control of their future by running their own businesses.$$ For many of them, franchising is the perfect fit. Luis Ricardo Galindo had been with Lenovo Corporation for years when the company decided to close the Boca Raton, Florida, office, where he worked. Not willing to risk another corporate layoff, Galindo began working with a franchise broker to identify franchises that would be right for him. Eventually, Galindo settled on Molly Maids, a franchise that specializes in residential house cleaning and is resistant to economic downturns. Because credit was so tight, Galindo tapped his retirement account to finance his franchise, which opened recently.

Retirees who are looking for second careers also are turning to franchising as well. $$They$$ve got school$-$of$-$ hard$-$knocks experience and business skills that they can apply on day one at a franchise,$$ says Michael Shay of the International Franchise Association. Six months after Kathy McAvoy$-$Rogalski retired at age $56$ from a large pharmaceutical company, she and her husband, James purchased a Fetch Pet Care franchise in Yonkers, New York. With annual sales exceeding $$43$ billion, the pet products and services industry is the seventh largest retail sector in the United States. Fetch Pet Care allows franchisees to operate their pet$-$sitting and dog$-$walking businesses from their homes, which keeps start$-$up and operating costs low. In its first year of operation, revenues for their business were $$55,000,$ more than their financial forecasts had indicated. Their major costs were paying their staff of seven dog walkers and sitters and paying the franchise royalty fee, which is $5$ percent of gross sales, and the cooperative advertising fee, which is $1\mathrm{.}5$ percent of gross sales. $$It$$s the perfect way to earn extra money,$$ says McAvoy$-$Rogalski of her franchise.

Franchising can be the ideal path to owning a business for people in almost any phase of professional life, whether they are retirees looking for a new direction and extra income or recent college graduates who are ready to embark on exciting careers. $$Boosted by a brand name, training, advertising, and an established business plan, a franchise can ease the struggle and the risk of opening a business and still let you call some shots.$$

$1.$ These examples show people at different stages of their professional lives choosing to become business owners with the help of a franchise. What conclusions can you draw from their stories about the benefits and appeal of franchising? $$

$2.$ What are the disadvantages of investing in a franchise? $$

$3.$ Suppose that one of your friends who is about to graduate is considering purchasing a franchise. What advice would you offer him or her before signing the franchise contract?