Franchises

Question 1

What is a Franchise

Answer 1

A Franchise is an agreement between an established company ( A franchiser ) and a franchisee ( the person who uses the brand name ) in which permission is granted to conduct business in a prescribed manner set by the franchiser.

Question 2

What is a Franchisee

Answer 2

The Franchisee as an obligation to pay “ Royalties” fee to the franchisor periodically but the franchisee in return gains from the reputation and business expertise or management of the franchiser.

Question 3

Who is a Franchise

Answer 3

Is a person who use the brand but they have they have to pay a fee.

In a franchise, the owner or operator is referred as an franchiser. The franchise has a “Parent Company “ . The parent company or franchiser is the owner of the trade mark product or service.

Question 4

Example of a franchise

Answer 4

KFC, Burger king , Mc Donalds, Wendy’s etc

Question 5

Who is a franchisor

Answer 5

A franchisor is a person that owns the brand.

Question 6

Characteristics of a franchise

Answer 6

1. Brand and Trademarks: Franchisees operate under the franchisor’s established brand name, trademarks, and logos, benefiting from the recognition and reputation of the brand.
2. Licensed by parent corporation .
3. Receives assistance from the parent corporation in terms of profession advise .
4. Training and Support: Franchisors provide initial training and ongoing support to franchisees, helping them to understand and implement the business model effectively.

5.Territorial Rights: Franchise agreements often include territorial rights that limit competition from other franchisees within a specific geographic area.

Question 7

Advantages of Franchise

Answer 7

1. Can use in internationally known brand name
2. Gain sales and visibility
3. Receives advise and training in business operation
4. Can make customers

Question 8

Disadvantages of Franchise

Answer 8

1. Must make regular payments to franchiser
2. Loses some independence in deciding how to run the business.

3.Royalty Payments: Franchisees are required to pay ongoing royalties to the franchisor, reducing their profit margins.

4. Dependency on Franchisor: Franchisees rely on the franchisor for support, training, marketing, and supply chain management, and may be adversely affected if the franchisor fails to fulfill its obligations.