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Franchising

Franchising. Year 10 Business Studies. Learning Objectives. To understand the principles of franchising To appreciate the advantages and disadvantages of using a franchise as a means of starting a business How to identify a suitable start up location for a franchise. What is a franchise?.

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Franchising

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  1. Franchising Year 10 Business Studies

  2. Learning Objectives To understand the principles of franchising To appreciate the advantages and disadvantages of using a franchise as a means of starting a business How to identify a suitable start up location for a franchise

  3. What is a franchise? The right given by one business to another to sell goods or services using its name National or international companies that have successful products or services Use their skills and experience to help others set up in business

  4. Who is who? • Franchisor • The business who has the name, product and brand and gives permission to use it in return for a fixed sum of money or a royalty payment • Franchisee • The person or business buying the permission to sell the goods or services from the franchisor

  5. Benefits of a franchise • Training • Franchisee receives training from the franchisor • Maintains a good name and reputation • Equipment • Franchises provide equipment as part of the total package

  6. Materials to use in the product or service • Franchisor sells the franchisee some or all of the materials used for production • Finding Customers • National advertising campaigns • Well known name (brand) • Back up services • Advice, loans & insurance

  7. Exclusive Area • Specific area to receive customers • No competition between franchises

  8. Costs Average amount needed to set up is £250,000 Depends on the type of franchise Fixed sum to start up Fee each month or year based on turnover (sales)

  9. Advantages & Disadvantages for the Franchisee • Disadvantages: • Initial investment can bevery high • Cannot sell the business without permission • Can only sell the franchise products or services – limits freedom • Some franchises are more successful than others • Advantages: • Only select people to run the franchise who are suitable so reduces risk of failure • It is clear from the start how much investment will be required • Established product or service, just have to repeat what the last did • On-going support

  10. Advantages & Disadvantages for the Franchisor • Advantages: • Increase market share without additional cost • Profitable way to grow the business • Can choose who you want to run the business • Disadvantages: • Little control over how the franchisee sells the products • A badly run franchise can affect the whole business reputation

  11. Identifying a suitable location • A retail franchise needs to be where customers can reach it easily • Fast food, hairdressers • Not so important for other types of franchise such as unblocking drains, these types need to have good, clear communication – telephone number, email

  12. Task Research the different franchises available and choose one you would like to be involved with Explain about the franchise opportunity, the cost, support available and conditions attached to it http://www.franchisedirect.co.uk/ http://www.whichfranchise.com/

  13. Task • McDonalds research

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