Franchisor and franchisee

• What is a franchisor?

  The creator of a franchise
• What is a franchisee?

  A person or company that pays to join
• What does a franchisor provide to a franchisee?

  A successful business formula
• What does a franchisee pay to the franchisor?

  An initial fee and a cut of profits
• How can you think of a franchisee in relation to a franchisor?

  Like an employee of the franchisor
• What is the first step a franchisee takes when joining a franchise?

  Pay an initial fee to the franchisor
• What does the franchisor control in a franchise?

  The product range and outlet appearance
• What is one aspect of the outlet that the franchisor controls?

  The interior design of the outlet
• What is a responsibility of the franchisee regarding staff?

  Training their staff for the branch
• What is one of the franchisee's responsibilities regarding recruitment?

  Choosing who to hire for their branch
• What does the franchisee control regarding stock?

  Getting the correct amount of stock
• How does the control of product range differ between franchisor and franchisee?

  Franchisor controls product range, franchisee does not
• What is the relationship between the franchisor and franchisee in terms of profits?

  Franchisee pays a cut of profits to franchisor
• Why do franchisees need to control stock levels?

  To meet anticipated demand in their area
• What is franchising?

  A business model licensing a business idea
• Who licenses the business idea in franchising?

  The franchisor licenses the business idea
• What type of business can a franchisee be?

  It can be a sole trader or company
• What initial fee does the franchisor receive?

  An initial fee for the business idea
• What is an ongoing royalty fee?

  A percentage of the franchisee's profits
• What advantage does a franchisee gain from franchising?

  Access to an established brand for growth
• What type of training does the franchisee receive?

  Initial training from the franchisor
• What marketing support might the franchisee receive?

  Support with marketing from the franchisor
• What is a potential cost for the franchisor?

  Training and marketing costs for franchisees
• Why is franchising a cheaper way to grow for the franchisor?

  Franchisees pay for setup costs
• What does lower capital investment allow the franchisor to do?

  Grow much faster than independently
• Who takes on the operational burden in franchising?

  The franchisee takes on the operational burden
• What motivates the franchisee to succeed?

  It is their independent business
• What local advantage might a franchisee have?

  Local experience and expertise in the area
• What is a challenge for the franchisor regarding quality?

  Ensuring consistent quality across franchisees
• What happens if a franchisee behaves poorly?

  It can impact the entire brand's reputation
• What does the franchisor need to consider due to increased franchisees?

  More time, resources, and money for management
• What additional burden might franchising create for the franchisor?

  The need for contingency planning
• What are the advantages of franchising for the franchisor?

  • Cheaper way to grow
  • Franchisee pays setup costs
  • Faster growth due to lower capital investment
  • Less operational burden on franchisor
  • Franchisee's motivation for success
  • Leverage franchisee's local expertise
• What are the disadvantages of franchising for the franchisor?

  • Hard to ensure consistent quality
  • Risk of poor behavior affecting brand reputation
  • Increased complexity with more franchisees
  • More time and resources needed for management
  • Need for contingency planning