Franchising

• What is franchising?

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

  The franchisor
• What is a franchisee?

  An independent business using a franchisor's model
• 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
• What type of training do franchisees receive?

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

  Support with national or global advertising
• Why is franchising considered a cheaper way to grow for franchisors?

  Franchisees pay for setup costs
• What are setup costs in franchising?

  Costs for fixtures and fittings
• How does lower capital investment benefit franchisors?

  It allows faster growth
• What operational burden do franchisees take on?

  Setting up the business locally
• Why might franchisees be motivated to succeed?

  It's their independent business
• What local advantage might franchisees have?

  Local experience and expertise
• What is a challenge for franchisors regarding quality control?

  Ensuring consistent quality across franchisees
• What risk does poor behavior by a franchisee pose?

  It can damage the entire brand's reputation
• What additional burden might franchisors face due to franchising?

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

  • Cheaper way to grow
  • Franchisees pay setup costs
  • Faster growth due to lower capital investment
  • Less operational burden on franchisor
  • Franchisees motivated to succeed
• What are the disadvantages of franchising for franchisors?

  • Hard to ensure consistent quality
  • Risk of poor behavior affecting brand
  • Increased complexity with more franchisees
  • Need for contingency planning