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Forms of Business Ownership ~ The Franchise ~

Forms of Business Ownership ~ The Franchise ~. The Franchise. One of the fastest growing forms of business ownership The franchisor sells to another person (the franchisee) the rights to use the business name and to sell a product or service in a given territory.

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Forms of Business Ownership ~ The Franchise ~

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  1. Forms of Business Ownership~ The Franchise ~

  2. The Franchise • One of the fastest growing forms of business ownership • The franchisor sells to another person (the franchisee) the rights to use the business name and to sell a product or service in a given territory. • Available in many different sectors (fast food, wine, funeral homes) • Franchise can be any form of business ownership (i.e. sole proprietorship, partnership, corporation)

  3. Franchise Agreement • Written contract between the franchise seller and buyer • Permit the franchisee to use the franchisor’s name, products, packaging • Franchisor will specify how the franchise is to be operated, what products can be sold, the advertising, etc. • Provide more than 1 million jobs directly, many more indirectly • Annual sales of $100 billion

  4. Advantages Proven track record and nationally or internationally recognized name Personal ownership like a sole proprietorship Less stress in initial set up as most issues like process, products and location, equipment, décor are spelled out by the franchisor Disadvantages Expensive to buy Must pay royalties for your sales Little say in many of the business decisions If the franchisor fails, so does the franchisee Franchises

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