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Franchises

Franchises. A franchise allows the owner of a successful business to duplicate it in another location without having to raise capital themselves. A franchise can be bought by a sole proprietor, a partnership, or a corporation.

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Franchises

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  1. Franchises

  2. A franchise allows the owner of a successful business to duplicate it in another location without having to raise capital themselves. • A franchise can be bought by a sole proprietor, a partnership, or a corporation. • Each independently owned franchise operates like a part of a large chain.

  3. The purchase is a continuing agreement between the franchiser ( the company that originated the venture) and the franchisee ( the person buying the rights to copy the venture). • The franchiser’s knowledge, image, success, manufacturing, marketing, and management techniques are all part of the agreement.

  4. Franchisee’s are not allowed to run the business as they see fit. • Franchisee’s must follow the policies, standards, product line, and procedures set forth by the franchiser. • A Franchisee is required to pay royalties.

  5. Each franchise uses the same trademark, equipment design, and operating procedures. • Each franchise produces the same standardized product or service. • Ex: Every Big Mac tastes the same at every McDonald’s.

  6. Franchise Activity • Choose one of the following franchises and determine the following: • How much it costs to start/open a franchise; • What are the ongoing fees or royalties; • What requirements do potential franchisees need to meet in order to be considered?

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