CHAPTER I

A.Background In an age of globalization, the boundaries between the countries have started to disappear as a result of the modernization of communication , plus the world is entering a period of global financial crisis that disrupt economic activities on a global scale . Thousands of employees laid off from his job instead of going in the country of Indonesia but this phenomenon has occurred in many countries in the world . Capitalist economic system can not trust anymore in the eyes of the world economists . As one of the measures to face the current economic problems are characterized by increasing unemployment figures it is time for citizens of countries in the world are in demand to start being independent does not rely on a company's employees . Form of self-reliance may take the form of opening a business or own and run their own business . According to Mahmud Machfoed Business is a trading business conducted by a group organized to make a profit by producing and selling services to meet the needs of consumers, Small business is independently owned and operated and not dominate its market. Franchise In another word Franchise is a license to work in other companies using business ideas and procedures for selling goods or services in exchange for royalties and other types of a payment. Many forms of business that can be undertaken by anyone , for example, is a strategic business franchise business that allows us to reap many benefits a lot from it . May assume only those prepared are able to win in the competitive era and the current global crisis. B. Problem Formulation As for the formulation of the problem in this paper are: 1. Small Business 1.1 Definition of Small Business 1.2 Characteristic of Small Business 1.3 Factors success in Small Business 1.4 Factors in the failure of Small Businesses 2. Franchise
1

2.1 Definition of Franchise 2.2 Benefit of Franchise

2.3 Weakness and Strengths of Franchising C. Objective Analysis 1. To Explore the concept of small business 2. To Explore the concept of franchise business D. Benefit To determine the extent to which the development of small businesses and franchises in our country, and to identify the weaknesses and strengths of small businesses and franchises, so if we want to open a business we can choose which one is good business for the future.

CHAPTER II

A. THEORY STUDY 1. Small Business.

1.1 Definition of small business Definition of small business set out in Chapter I, Article 1, paragraph (1) of Law No. 9 of 1995 on Small Business . Namely: "economic activity is small scale and meet the criteria of net worth or annual earnings, as well as ownership, as defined in this Act". Notion here includes informal small businesses, ie businesses not on the list, not recorded, and not a legal entity, as determined by the competent authority. Small business is independently owned and operated and not dominate its market. For example : Barbershop, Cafe, outlet and others.
1.2

Characteristic of small business The characteristics of small and medium enterprises in Indonesia, in general are: a. Management stands alone, in other words there is no distinct separation between the owner and manager of the company. Owner and manager of the SME is. b. Capital provided by an owner or a small group of capitalists. c. Operations is generally the local area, although there are also SMEs have overseas orientation, in the form of exports to trading partner countries. d. Size of the company, both in terms of total assets, number of employees, and a small infrastructure.

1.3 Factors success in Small Business Small companies tend to be more flexible than large firms . They can adjust their plans very quickly attention to customers and employees, the burden remains lower , and greater motivation owners . More personal attention to customers and employees, small business owners have more direct contact with their customers and a better satisfied of what they want and very large companies . they can respond quickly to change and they want to offer service . Customers are more personal. large companies spend heavily on marketing research to keep maintain accounts in changing the lack of customers.
3

Relationship between the owners of small firms and their employees more direct and personal than in a large company . Labor and management in large companies often communicated through representatives. In small companies, owners and workers talk face to face . Small companies often have the burden remains lower than large firms. Small companies do not have full time lawyers and registered public accountants on the payroll, as well as larger companies . This small professional firm hold on the basis that while only when necessary, such as the savings and secure money. This allows a small company to sell its more expensive products lower than that of a large company. 1.4 Factors in the failure of Small Businesses Factors - factors that lead to failure in running a business or a small business is: 1. waiver (bad habits, bad health, marital problems, and so on) 2. disasters (theft, fire, death of owners, and so on) 3. fraud (embezzlement, false approvals and so on) 4. economic factors (high interest rates, loss of markets, and so on) 5. experience (incompetence, lack of experience mangerial, and so on) 6. sales (a competitive disadvantage, the difficulties inventory, location is weak (the poor, and so on) 7. costs (institutional debt burden, heavy operating expenses) 8. customers (the difficulties that can be accepted, too few customers) 9. assets (fixed assets redundant, overexpansion) 10. capital (burdensome contracts, excessive withdrawals, indequte capacity beginning) How to be an owner of a small-business owner in one of three ways, way is: take over the affairs (of the family business, buying an existing company, or start a new company. Each has its own set of problems and opportunities. Taking over affairs (the family business every year many companies taken over by relatives, often by people who are "educated" in the business (the business people are prepared to go
4

in to take over when the former owner dies or is no longer able or willing to run company.
2. Franchise 2.1

Definition of Franchise According Winarno (1995, p. 19) Franchise or franchise is a business partnership with a strong and successful business man or a weak relatively new in the business with the goal of mutual benefit, especially in infrastructure to provide products and services directly to consumer. In another word Franchise is a license to work in other companies using business ideas and procedures for selling goods or services in exchange for royalties and other types of a payment. Another understanding of the franchise that is a license to use a form of a business idea or procedure in the granting special rights to sell the franchisors goods or services in a defined territory

2.2

Benefit of Franchise Businesses that have franchises and operates his own business in seeking profit from the organization's network. Benefits of franchising are: (1) the introduction, (2) management training and support, (3) economy in the purchase, (4) and financial assistance (5) assistance protections advertisement International promotion also explain about how to franchise-franchisor offering franchises of the business network

1. Introduction phase. The rate of growth of franchise operations reach to some countries in the world. However some operations in just one city. Without. looking the outlet
5

(shopping, store, restaurant, etc.) is widespread consumer recognition because all units are basically a lot of love. Franchisor usually provides the franchisee with an early plan for the construction and operation urged in standardizing all channels. Benchmark breakdown in the franchisor's operations manual and franchise agreements and backed with beings and control procedures are standardized. 2. Management training and assistance Many franchisors operated training schools for franchise. McDonalds franchisee who has been in years past and for a decision at that time. trainees work 20 hours a week without pay in a McDonald's restaurant. The participants also through turnover in all classes on regional corporate locations. The training was followed for two weeks to promote courses at the University of Hamburg, the headquarters of McDonalds. Representatives also visited the McDonalds franchises in any place to give them their business trip training and assistance. 3. Economy in the purchase Franchisor make or buy goods from a supplier in a large volume and sell it to the franchisee. Lower than the prices of goods franchisor and the franchisee will pay a lower price if the item they want to buy the product in the economies of scale that large-scale for each purchase. 4. Financial aid. Typically a franchisee build a certain percent of the cost of land, buildings, equipment, and promotion the franchisor helps with the rest. Franchisors that would make a loan directly to the franchisee, the franchisor also often helps monopolies to secure loans of various types of lenders and sell stock to the credit monopolies. in some cases both the parties agree on a joint venture. The franchisee does not pay back the money that was built by the franchisor. franchisor instead became a part-owner of the business.

Promotional assistance. Franchisor often provide their franchisees in a view, radio scripts, and publish. Franchisor can also help their franchisees to develop promotional programs.
2.3

Weakness and Strengths of Franchising a. Strengths of franchise is as follows:

Business can be quickly opened. Since you decided to buy a particular franchise business (outlet) opened, a

relatively short time. The process can be faster if the franchisee has sduah place (self, contract, or bank loans) in a suitable location.

Existing system. Franchise buyers do not need to find or design the system (financial, human

resources kriteris, equipment or technology, supply of goods or services or raw materials, determine the sales price, and others. Franchisor (franchise owners) have prepared everything. Parties franchisees stay run according to the instructions and rules given.

The existence of training. Prior to opening the business, the franchisor usually do training for the

franchisee or the person appointed. Training or training in a way that is so open outlets, businesses can immediately roll as another outlet that has long been open (success).
Ride the big names and well known.

Building a business or a brand, takes a long time. By purchasing a franchise, the franchisee the right to use the name of the well known and proven success in the market.

Small risk.

Any business has its own risks. Including franchise business. However, rather than opening a new business, franchise business failure risk is relatively small.
Can be to exercise

Buying a franchise can be used as a training tool for the later opening his own business. Many franchisors that were originally franchisee. b. Weaknesses of franchising is as follows:

Pay a franchise fee. This fee must be paid or repaid in the event of an agreement between the

buyer and the seller of the franchise. Franchise fee applies to time 3, 5, 7 or 10 years. The amount varies widely ranging from millions of dollars, tens of millions, hundreds of millions to billions of dollars. It is beyond other investments, such as shop or building. When building your own business, this money can be used as capital.

Pay a royalty fee. Royalty fee is a type of payment that must be paid each month to the

franchisor. The amount varies between 2-10 percent. Rolaty fee is generally calculated on the total income per month. So, even though the business may not be profitable, royalties must still be paid.

Not free.

A system and a set of rules that must be followed, in addition to helping buyers and facilitate franchise turns on the other hand make the franchisee feel restrained or not free. If you want to add or change a menu which is more like the franchise sells food for example, must be approved by the franchisor.
Continuous supervision.

To achieve the desired goal, the franchisor to control and continuous supervision. In fact, in terms of revenues or profits, the franchisor knows exactly how many. Franchisees often feel uncomfortable because of the day to be in control and feel spied upon.

CHAPTER III

PROBLEM ANALYSIS In the 21st century in which each State has no limits of space and time, the tendency will change the business orientation. If previously the manufacturer can impose its will to the
9

consumer, then what happens next is the opposite: consumers who actually impose its will upon the manufacturer. Investment flows to the place the most profitable. forced manufacturers to make the products in accordance with the values and desires of consumers. Thus very positive competition opened for competition. And opportunities for small businesses to be more developed. And so the small company is very important for the stability of the State's economy because small businesses in our country, after the crisis in 1998 was able to absorb human resources 99.4% and 59.3% contribution to GDP. Position of small businesses in the midst of the business world has got a steady, more employment, participate launched the State's economy, and be able to live side by side and prop up large companies. Small businesses also are agile and able to live on the sidelines of a large company with a strategy to make the product unique and special so do not face large companies as competitors. Types of small and medium business is a business that is able to drive the Indonesian economy was reflected when the global crisis that hit almost all countries in the world, many large companies out of business due to the global crisis. But for small businesses such crises less disturbing business continuity, it is proved from the statistics central body 2010 which states that the type of small and medium enterprises grew by around 10 to 15% in Indonesia. All that is inseparable from the government program that now prefers to reel the sector of small and medium enterprises with programs such as KUR, KUKM, SHGs etc. As an example of the type of garment enterprises in the field of small business in this area has a good prospect in the future, but more and more competitive and complex. Needs consumerist society will escalate because the purchasing power of the people can be met with a wide range of trendy fashion and also the price is more economical, more people are interested in buying or ordering product quality domestic products to compete with wellknown products. However. this type of business has considerable risk because managed by individuals and do not have a system that has been tested. In addition there is also a small business or franchise franchise business in Indonesia is growing rapidly these days. With more and more emerging franchise businesses, is expected to help the Indonesian economy. More and more are in this business then it will lead to very tight competition in the business world. therefore, it is necessary to strategies which are very apt to be able to compete with other business competitors. Franchising is actually a business system that has long been recognized by the world, which for the first time
10

introduced by the Singer sewing machine company in the United States. Opportunities arising from the franchise attracts people from various backgrounds such as entrepreneurs, professionals, retirees, and even young children who recently graduated graduation. Business format franchising is the undeniable existence and favored by businessmen given the small risk of failure that may arise in running the business for beginner entrepreneurs. Franchise the easiest alternative to starting a business. When people have to start from scratch to start a business, then the business is not a franchise. Through franchise makes marketing easier. Through franchisees, investors do not need to think about the taste, market segments, supply of raw materials, and even some that provide carts to sell. Everything is available, and proved accepted and recognized by the general public so that investors are only staying for a strategic location to begin to open his business. For example in our country such as McDonals , JCO, Pizza Hut, Bread Talk, Dunkin Donnuts, starbucks ect. Global competition requires employers not only anticipate competition from domestic but also have to anticipate competition from abroad. Franchising / franchise is one business that benefits both the franchisor and the franchisee. besides that there must also be borne losses. Franchise business is a new business or an alternative for employers who often wrestle in the business world. They know that having a franchise business that promises profit or gain in the future. But we need to know that behind the success there must be a failure of a franchise business, because the competition is so tight in this business.

CHAPTER IV

A. CONCLUTION Business is a trading business conducted by a group organized to make a profit by producing and selling services to meet the needs of consumers, that is characterized
11

by an owner as well as manager of his own company and in general have relatively little capital but a small business or a small business can be a great business if the business strengths and advantages in running a small business. Example of business franchise business is a business network as one that begins with a small capital if and only if the business person or in this case is frenchisor start and open a franchise business systematically starting from the introduction, franchise management, financial and administrative systems to start to open up the franchise business. B. SUGGESTION Small business is a strategic business activity amid the current global financial crisis and as an alternative solution emphasizes unemployment more lately increased. Governments need to support small business development than this, in this form of capital funding with relatively low interest is something that is needed by the business.

REFERENCE www.Ekonomi kompasiana.com www.Rahmanelieser.blogspot.com

12

www.herusupanji.blogspot.com http://faniblogs14.wordpress.com/2011/04/10/menjamurnya-waralaba-franchise

13