Franchises Flashcards

1
Q

What is a Franchise

A

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.

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2
Q

What is a Franchisee

A

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.

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3
Q

Who is a Franchise

A

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.

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4
Q

Example of a franchise

A

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

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5
Q

Who is a franchisor

A

A franchisor is a person that owns the brand.

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6
Q

Characteristics of a franchise

A
  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.

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7
Q

Advantages of Franchise

A
  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
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8
Q

Disadvantages of Franchise

A
  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.

  1. 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.
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9
Q
A
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