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FRANCHISE

FRANCHISE. a business arrangement where one firm pays for the right to trade under the name of another. FRANCHISER - the business which sells the right to trade using its name to others, eg, McDonald’s, Hertz

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FRANCHISE

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  1. FRANCHISE a business arrangement where one firm pays for the right to trade under the name of another FRANCHISER - the business which sells the right to trade using its name to others, eg, McDonald’s, Hertz FRANCHISEE - the person who buys the right to trade using the name of the mother company

  2. Why buy a franchise? • existing, established product therefore more chance of success – less risk • cheaper market research and promotional costs • may receive help and training from franchiser • lower start up costs • good ideas can be shared among all franchisees

  3. Why sell a franchise? • quicker growth - can cover wider geographical area more quickly without having to buy premises or pay staff • provides funds - franchisee must buy franchise and pay part of its profits to franchiser

  4. DISADVANTAGES • reputation of mother company depends upon how good the franchisees are • franchisees are bound by contract which restricts how they run their business • franchisees must purchase all supplies from the franchiser • part of profits/turnover must be paid to franchiser

  5. Franchise Tasks. For your jotter……… • Explain the meaning of “Franchise. • What is the name of the person/business who sells the licence? • What is the name of the person who buys the licence? • Describe the advantages and disadvantages for the franchiser • Describe the advantages and disadvantages for the franchisee. • Using a suitable software package, design a poster outlining what you know about franchising. Include examples. These will be displayed in the classroom and on the Business Studies Blog.

  6. COMPUTER TASK • The following businesses are all franchises. • Find out the following information about one of them: • what the nature of the business is • how much it costs to start up a franchise • the support given to the franchisee by the franchisor • the size of the business • where franchises exist • any other information which you think would be relevant • Present you findings using PowerPoint

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