Franchises

Question 1

What are franchises?

Answer 1

A franchise is a business whereby the owner licenses its operations—along with its products, branding, and knowledge—in exchange for a franchise fee.

Question 2

What is a franchisee?

Answer 2

an individual or company that holds a franchise for the sale of goods or the operation of a service.

Question 3

What is a franchisor?

Answer 3

A franchisor sells the right to open stores and sell products or services using its brand, expertise, and intellectual property.

Question 4

What are the benefits of becoming a franchisee?

Answer 4

Reduced risk of failure.
Ongoing business support.
Market expertise.
Brand recognition and loyalty.
Increased buying power.
Higher profits.

Question 5

What are the drawbacks of becoming a franchisee?

Answer 5

Limited creative opportunities.
Financial information is shared with the franchisor.
Varied levels of support.
Initial investments and start-up costs can be expensive.
Contracts aren’t permanent.

Question 6

What are benefits of becoming a franchisor?

Answer 6

Grow your business.
Costs.
Easier management.
Develop your brand.
Motivated franchisees.
Purchasing power.
Ideas for future success.
Support from others.

Question 7

What are drawbacks of becoming a franchisor?

Answer 7

Loss of Control.
Poorly Performing Franchisees.
Compliance Costs and Risk.
Managing Growth.