Franchises Flashcards
What is a franchise?
A way of expanding your business quickly
What is a franchisor?
The person who owns the franchise and grants the license to another person or group of people (franchisee) to allow trading using the brand and business format
What is the franchisee?
The person who is being granted the use of the business’s brand and format
What is a benefit for the franchisee of using an existing brand and format?
It has been tried and tested meaning they it is less likely to fail
How does the franchisor help the franchisee?
By providing advice, support and training
Is a franchise a type of business where it is easier or harder to raise finance?
Easier
Is it necessary to have experience in that industry?
No industry experience is required
How easy is it to become a franchisee?
It is very expensive as it involves paying frees and royalties and with established companies there often a long process to go through before being granted the license
What can be a drawback of being a franchisee?
There are restrictions on actions including selling the business (must have franshisor permission) and imposing your own ideas
How long does a person stay a franchisee for?
It depends on the contract as they are contracted to be a franchisee for a fixed period of time and this is not automatically renewed when it runs out
Why is a operating as a franchise a benefit for the franchisor?
They don’t have to spend large amounts of money in order to expand
What does franchising enable?
Geographical growth for a minimum investment
How do franchisors still have control?
They have direct control over the layout of the business, the products sold, the uniform etc
What are the main issues for the franchisor?
- Cost of training and support
- Slight loss of control compared to selling the product yourself
- Possibility of conflict
What is a co operative?
A business that is owned and controlled by members, members are not big businesses, they are usually customers or workers who purchase shares
