What are franchises

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Franchises Homework

(Unit 10)

By Omar Omar Y10A

  1. Explain in your own words how a franchise business is set up.

A franchise business is set up after a pilot operation or trial is carried out to see if this idea was commercially viable. If this trial is profitable then the company sets up a training scheme for franchisees based on what has been learnt in the trial. When the arrangement are complete then the company advertises for a franchisee. Many candidates answer, and they are put through a careful scrutiny test to see if they have the necessary qualities. The company must be very selective; the wrong choice could permanently mar the company’s reputation. After the franchisees are chosen, then they are trained to run the business. Then they are given the exclusive rights to use the brand name in exchange for royalties which would continue throughout the companies’ marriage.

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  1. What are the main advantages and disadvantages for a franchisee?

There are numerous advantages and disadvantages for a franchisee. For example, they have a bigger stab at success than small businesses as this product/business will already have been tried before and succeeded. In other words, it is already more established and has a target customer base that will buy or make use of the product.

Since a potential franchisee will be working with an already established name, then they will have no difficulties in raising money from banks because there will be less of a risk. ...

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