Generating And Protectung Business Ideas Flashcards
Franchise
When a business (the franchisor) gives the right to supply its product or service to another business (the franchisee).
Types of franchise
Business format franchise
Distributors hip and dealership
Agency
Licensing
Benefits to the franchisee
Lower risk than non-franchisees
Established brand name
Helps to attract finance from banks
Franchisor provides marketing and other services
Training provided
Franchisee usually has monopoly in area
Suppliers usually organised by franchisor
Disadvantages to the franchisee
Franchisor’ idea may not be viable
Free to franchisor and so higher start-up costs
Franchisor fee may also lower profit margins
Reputation may be adversely affected by other franchisees
Less independence
Franchisor rules may mean business is difficult to sell
Benefits to the Franchisor
Regular flow of income from franchisees Risk shared with franchisees Expansion paid for by franchisees Rapid growth of franchise is possible Franchisor can retain a high level of control
Disadvantages to the Franchisor
Reputation may be adversely affected by actions of franchisees
Can be expensive to monitor franchisees
Profit from franchisor’s idea is shared with franchisees
Copyright
Legal protection against copying for authors, composers and artists
Copyright material includes
Books Information leaflets Films Computer programmes Sound recordings
Patents
An official document granting the holder the right to be the only user or producer of a newly invented product or process for a specified period.
Benefits of patents
Owner has a monopoly & can sell product without close competition for up to 20 years
Can bring in revenue through selling, renting or licensing the patent
Disadvantages of a patent
Expensive
Takes a long time to apply for and protect a patent
Preventing other firms from using your patent can mean high legal costs
Trademarks
Are signs, logos, symbols or words displayed on a company’s products or on its advertising.
How can trademarks help a business
Providing an image that is instantly recognisable to customers
Creating a USP, by differentiating a product from those of its competitors
Makes it easier to launch new products, due to recognisable trademark
Sources of ideas for entrepreneurs
Spotting trends and anticipating their impact on people’s lives
Noticing something that is missing from the market or that can be improved on
Copying ideas from other countries
Taking w scientific approach
Brainstorming
Personal/business experience
