fracnshise Flashcards
What is a franchise
A franchise is a business that uses the name, logo, and trading systems of an existing successful business.
Not strictly a legal structure
It is a legal contract between 2 firms
A franchise allows a business to expand rapidly
how does a franchise work
An entrepreneur would own a part of the business (franchise) they have set up, but they would pay royalties (fees) to the brand.
It is how many businesses have expanded such as KFC, McDonald’s, Toyworld, Civic Video, Paper Plus
Franchisor
– the business that gives franchisees the right to sell its product and use its name etc. in return for a fixed sum of money or a royalty payment
Benefits of a franchise: brand name – known nationally/internationally, regional managers, high standards, checks, consistency, and expectations.
A brand name – known nationally/internationally, regional managers, high standards, checks, consistency, and expectations.
Benefits of a franchise Training & advice
Training & advice – franchisees usually receive training from the franchisor
National/international advertising is paid for by the Franchisor Materials & equipment to use in the product good or service – Franchisors typically sell their franchisees some or all of the materials used in production.
Benefits of a franchise: Reduced risk of failure, back up services, exclusive area
reduced risks of failure: existing customer base
Back-Up Services – some will offer services such as loans, advice, and insurance cover for example.
Exclusive Area – Often a new franchise will be given an exclusive area in order to draw new customers eliminating competition