Private sector businesses 2.

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Private Sector Businesses 2

Franchises

A franchise is a way of owning a business without taking the normal risks of starting out on your own. It is little wonder, then, that it is so popular! Benetton, Prontoprint, Wimpy, Kentucky Fried Chicken, BSM and Body Shop are all examples of franchises. These are enterprises where a small shop or outlet is run by a franchisee, who has been given permission to operate the business by a franchisor the organization which owns the product or service being sold.

The franchisee gets the benefit of the franchisor’s expertise in marketing and operations. The franchisor will often supply the raw materials or stock for sale, provide shop displays and give help and advice to the franchisee, who usually has the exclusive right to operate in a certain geographic area.

The franchisee has the responsibility of running the business on a day-to-day basis and can keep most of the profits. However, he or she must raise most of the capital and pay an initial licensing fee to the franchisor. In addition, the owner must pay a share of the annual profits to the franchisor for the use of the trade name (royalties).

Franchises in Britain are overseen by the British Franchise Association (BFA) which operates a code of conduct for its members.

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Franchises also operate in areas other than retail. These include:

  1. goods and services sold direct to the public, e.g. Tupperware and Dyno-Rod
  2. Production plants, e.g. the bottling and canning of Coca-Cola, Pepsi and 7up
  3. cable companies such as CableComms
  4. care services for the very young and the elderly, e.g. Alphabet Zoo and Community Careline Service.

Another form of franchise is that where an individual or organization is allowed to operate a business on the premises of someone else. For instance, a hotel or hospital, may give a florist permission to open an outlet in their ...

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