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What are Franchises?

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Introduction

A franchise is when a business allows someone to sell its goods or services its trade marks, brand name, image and system of operation. The franchise doesn't provide all its services for free. Franchising is a very common type of business ownership. Some of the biggest businesses in the world are run by using franchising. An example is McDonald's. The main aim of a franchise is to: The main aim of the owner of franchise (franchisor) is to expand their current business without having to put in large sum of capital. The franchiser is likely to have profit maximisation or taking a maximum market share as major aims. For the franchisee, a successful business and a reasonable income are likely to be targets. For the franchisee, the main aim will be to start a successful business by using a tried and tested business idea. ...read more.

Middle

in for the business which means the business will grow without risk of debt for the franchisor Regular income The franchisee is going to be working hard to get his income but he is going to pay most of it to franchisor which produce regular income without working Less organisation Less work and less organisation for the franchisee because the franchisor will be doing all that Keep control The franchisor will have all of the control over the business Keeping the business successful Generally franchisee will have a lot of money tied up so they have a lot to lose, they are more then happy to make the business successful and get regular income The advantages of a franchise to the franchisee are: Advantages Reasons Low risk to set up Franchisee don't have to do much for the business because the franchisor supply them with everything which will make the business become successful, in which case its not ...read more.

Conclusion

Disadvantages of a franchise to the franchisee: Disadvantages Reasons Not as much freedom as normal business Franchisee signs a contract with franchisor which states all the things franchisee must or must not do. If they do something which is against the contract the business will be taken away from the franchisee Franchisee cannot sell business without permission Franchisee can't sell business without permission unless the franchisee finds some one who is willing to take over. This person would have to be agreed by the franchisor Franchisor can end business without compensation If the franchisee is breaking the contract or not meeting the expectation, the franchisor can take the business away without returning any money back to the franchisee in form of compensation Franchisee has to pay payments to franchisor regular Franchisee has to pay the franchisor for using the company's name, brand, materials and equipment as it is recommended in the contract. If they do not pay they would be in break of the original agreement ?? ?? ?? ?? Unit 1 Investigating business Imran Hasaan 10LDM ...read more.

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