ownership types Flashcards
What is a franchise?
A business model in which an established business sells a license to another business to use their brand in return for payment
Who is the franchisor?
The business who sells a franchise
Who is the franchisee?
The business who buys the franchise
What is a royalty in the context of franchises?
The regular payment made based on sales
List three common characteristics of franchises
- An initial set up fee
- A percentage of sales turnover paid annually
- Rights to use products, services, or logos
What was the annual sales figure for UK franchises?
£12.4 billion
What is the average turnover per outlet for UK franchises?
£360,000
What percentage of franchises are profitable?
90%
What is the average age of franchisees?
47
What percentage of franchisees are male?
66%
What is the average borrowing amount for franchisees?
£70,000
Fill in the blank: A franchisee should consider the _______ of the franchise.
[location]
What are two advantages of taking on a franchise instead of opening an independent business?
- Trusted and well-known brands
- Support from franchisor back-up services
What is a disadvantage of operating a franchise compared to an independent business?
Limited control over all aspects of business decision-making
What are three factors that can contribute to a successful franchise?
- Proven format
- Distinctive image & brand
- Potential for profit for both franchisor and franchisee
True or False: A franchisee has the flexibility to adapt to a changing market.
True
What should a franchisee evaluate regarding the franchisor’s business?
How long the franchisor has been in business and how financially secure it is
What is a common reason for potential franchisees to conduct market research?
To identify good franchises and avoid poor ones
What is one major consideration for a franchisee regarding competition?
Level of competition in the area
