Franchise

• What is a franchise?

  A business that allows others to sell its goods
• What does a franchise provide to the franchisee?

  License to sell goods using its name
• How does buying into a franchise differ from starting a new business?

  Franchisees join an established business
• What is the benefit of joining a franchise for a new business owner?

  Reduces the risk of business failure
• What must a new business pay to join a franchise?

  A fee to join the franchise
• What are tangible goods?

  Physical products sold by a company
• What are intangible services?

  Non-physical products or activities
• Who is a franchisee?

  A business selling branded products under license
• Who is a franchisor?

  A business granting rights to franchisees
• What is a royalty payment in franchising?

  A fee based on gross sales revenue
• What are the advantages of setting up a franchise?

  • Access to free training and marketing
  • Part of an established business
  • Easier to make money
  • Lower risk than starting a new business
• What are the disadvantages of setting up a franchise?

  • Percentage of profits paid to franchisor
  • High initial setup costs
  • Limited individual business decisions
  • Local competition from other franchises
• How does a franchisee's decision-making differ from an independent business owner?

  Franchisees consult franchisors for decisions
• What is the relationship between a franchisee and a franchisor?

  Franchisee sells products under franchisor's license