Franchises

Question 1

What is a franchise

Answer 1

It is a store that is run by the franchisor who sells the right to use the business to the franchisee

Question 2

Who is a franchisor

Answer 2

The owner of a business who sells the rights to use the business name, logo, brand etc.

Question 3

Who is a franchisee

Answer 3

An individual that uses the name, logo of the business provided by a franchisor

Question 4

Advantages of being a franchisee

Answer 4

-reduced risk of business failure
-support from the franchisor
-no prior experience needed
-established relationships with suppliers
-ideas for future success

Question 5

Dissadvantages of being a franchisee

Answer 5

-restrictions on how to run the business
-franchisor may go bust
-profits are shared
-inflexible(can’t implement own ideas)
-continual serve costs

Question 6

Advantages of being a franchisor

Answer 6

-easier to finance the business
-business can grow and develop
-easier management
-reduced risk for business failure

Question 7

Disadvantages of being a franchisor

Answer 7

-franchisee may need large amounts of support
-not a fix for a failing business
-brand image could deteriorate due to the franchisee