Franchising Year 10 Business Studies Learning Objectives To

Franchising Year 10 Business Studies

Learning Objectives • To understand the principles of franchising • To appreciate the advantages and disadvantages of using a franchise as a means of starting a business • How to identify a suitable start up location for a franchise

What is a franchise? • The right given by one business to another to sell goods or services using its name • National or international companies that have successful products or services • Use their skills and experience to help others set up in business

Who is who? • Franchisor – The business who has the name, product and brand gives permission to use it in return for a fixed sum of money or a royalty payment • Franchisee – The person or business buying the permission to sell the goods or services from the franchisor

Benefits of a franchise • Training – Franchisee receives training from the franchisor – Maintains a good name and reputation • Equipment – Franchises provide equipment as part of the total package

• Materials to use in the product or service – Franchisor sells the franchisee some or all of the materials used for production • Finding Customers – National advertising campaigns – Well known name (brand) • Back up services – Advice, loans & insurance

• Exclusive Area – Specific area to receive customers – No competition between franchises

Costs • Average amount needed to set up is £ 250, 000 • Depends on the type of franchise • Fixed sum to start up • Fee each month or year based on turnover (sales)

Advantages & Disadvantages for the Franchisee Advantages: • Only select people to run the franchise who are suitable so reduces risk of failure • It is clear from the start how much investment will be required • Established product or service, just have to repeat what the last did • On-going support Disadvantages: • Initial investment can be very high • Cannot sell the business without permission • Can only sell the franchise products or services – limits freedom • Some franchises are more successful than others

Advantages & Disadvantages for the Franchisor Advantages: • Increase market share without additional cost • Profitable way to grow the business • Can choose who you want to run the business Disadvantages: • Little control over how the franchisee sells the products • A badly run franchise can affect the whole business reputation

Identifying a suitable location • A retail franchise needs to be where customers can reach it easily – Fast food, hairdressers • Not so important for other types of franchise such as unblocking drains, these types need to have good, clear communication – telephone number, email

Task • • • VLE Subjects Business Studies Year 10 Mac. Donalds case study higher Typed in YOUR OWN WORDS