1.4b Franchising

Question 1

What is franchising ?

Answer 1

When one business gives another business permission to trade using its name and products in return for a fee or share of profits

Question 2

Advantages of franchising

Answer 2

• lower risk than setting up independently, as the business model is already successful
• support and training are provided by the franchiser
• franchises benefit from national marketing campaigns

Question 3

Disadvantages of franchising

Answer 3

• have to pay an initial fee as well as ongoing fees / share of profit
• can’t make independent decisions
• brand reputations can be damages by other franchisees if they don’t maintain standards