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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. ...read more.


On a sour note, there are many disadvantages for a franchisee. They will have less independence than sole proprietors and almost no creative control. In a way they may not be able to expand their business without loosing credit for it. Basically, a franchisee is tied to the franchiser. He or she will not be able to sell of the business without the latter's agreement, and may not always be able to renew the deal. Also, they would have to keep on paying royalties to the franchiser for use of the brand name. They could end up being charged more if they have to buy supplies from the franchiser (instead of buying them locally for a cheaper price). ...read more.


The franchisee's main source of finance comes from the savings and profits they make. 6. What are the main differences between a sole trader and a franchisee? The main difference between a sole trader and a franchisee is that a sole trader has his or her own brand name and logo, while a franchisee is just another version or copy of the real thing. As an example, a private business might by the locally-known Wimpy's Burgers, and a franchise would be the world-known McDonalds. Both serve the same products and both target the same customers, but Wimpy's is just locally-owned. Usually franchisees have less control over their work and have to answer back to the head franchise office. But sole traders are entirely in charge of what they do. However sole traders may find it harder to get the initial set-up fund while a franchisee would get it with ease. ...read more.

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