Franchise and Franchisees

Question 1

What is a franchise?

Answer 1

A business with a well-known brand name (franchiser) lets a person or group (franchisee) set up that business using that brand

Question 2

what is a franchiser?

Answer 2

the well known brand that is already set up

Question 3

what is a franchisee?

Answer 3

buys the franchise

Question 4

what are the advantages of a franchise to the franchiser ?

Answer 4

• may not have to sound loads to expand
• products under franchisers control
• applicants can be carefully selected for their suitability to become a franchisee

Question 5

what are the disadvantaged for the franchiser?

Answer 5

• control over product not as great as it would be if they sold it themselves
• cost of supporting franchisee
• risking reputation
• possibility of conflict

Question 6

what are the advantages to the franchisee?

Answer 6

• lower risk as brand already set up
• specialist advice and training available from franchise
• marketing already does by franchiser - focus on selling and making profit

Question 7

what are the disadvantages to the franchisee?

Answer 7

• profit is shared (continued royalty payments)
• franchise may be for a fixed period
• less control and independence

Question 8

what is a co-operative?

Answer 8

a business that is owned and run by its members (employees and customers). profits are shared between members rather than to shareholders

Question 9

what are the advantages of a co-operative?

Answer 9

• legally straightforward to set up and inexpensive
• all working towards common goal - employees motivated and productive. customers loyal and supportive
• usually limited liability for members
• higher quality of service - customers = members

Question 10

what are the disadvantages of a co-operative?

Answer 10

• capital can be limited - to what members contribute
• weak management - those selected may not have grasp of business principles
• slow decision making - too much involvement of members