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Franchise Assignment: Liquid Capital

1870 words - 7 pages

1. Description of the Franchise
Liquid Capital has an international network of franchisees specialized in financial services for existing businesses in urgent need of financing. The main strategy to find funding for those businesses experiencing cash flow problems is to collect the accounts receivable of their customer businesses, that is, the money that is owed to this business by its own customers. Furthermore, the latest press release published on Liquid Capital’s corporate website on December 1, 2007 states that there are 25 franchise owners (or “principals” as the company calls them) throughout Canada. The customer website lists three franchisees in Quebec, all on the island of Montreal.
2. External Factors
The competitive environment of factoring firms is a monopolistic competition. Indeed, there are many businesses in the province that offer factoring services to existing businesses in financial problems. Customers may perceive the service provided by each company to be different. New firms wanting to enter the factoring market should be able to do so successfully. In other words, barriers to entry in this market are relatively low. Moreover, there are many firms in the market, such as Brome Capital, Jebco International, J D Factors, and Accord Financial. Factors in the external environment that affect businesses in the factoring market obviously include the strength of the economy in general. For example, when the economy is doing poorly, businesses are likely to experience difficulties in collecting their accounts receivable because their customers have less money available to pay their debts. That means that during a recession, for instance, when cash flow problems start to be a concern for many businesses, chances are that more businesses will call for help from factoring firms to turn their receivables into cash. In the technological environment, new software or online secured websites could be designed to connect businesses with their customers and Liquid Capital, which would enable quick and easy management of accounts receivable as soon as an account becomes overdue in the case of long-term management of the receivables of a business. Such a technological advance would certainly benefit both businesses and Liquid Capital franchisees, for it would accelerate the process and reduce the need for paper copies of overdue accounts or the need for the principals to go work at their customers’ office to have access to necessary information such as contact information, date of the last payment, credit ratings, etc.
3. Benefits Offered by the Franchisor
There are many reasons why a person who wants to start a business in the factoring industry would choose to purchase a franchise from Liquid Capital. First, the company provides very good “marketing systems” as it calls them. Marketing systems are actually tools for a new franchisee to start a business and have success. They include professionally designed and printed promotional...

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