© 2015 albert-learning.com Franchise FRANCHISE

© 2015 albert-learning.com Franchise Vocabulary Trademark : A symbol, word, or words legally registered or established by use as representing a company or product. Obligation : An act or course of action to which a person is morally or legally bound, a duty or commitment. Prominent : Important; famous. Thorough : Complete with regard to every detail, not superficial or partial. Diligence : Careful and persistent work or effort.

© 2015 albert-learning.com Franchise WHAT IS A FRANCHISE? A franchise is the agreement or license between two legally independent parties which gives: A person or group of people (franchisee) the right to market a product or service using the trademark or trade name of another business (franchisor) The franchisee the right to market a product or service using the operating methods of the franchisor The franchisee the obligation to pay the franchisor fees for these rights The franchisor the obligation to provide rights and support to franchisees

© 2015 albert-learning.com Franchise Advantages of Franchising : Your business is based on a proven idea. You can use a recognized brand name and trade marks. The franchisor gives you support - usually including training, help setting up the business, a manual telling you how to run the business and ongoing advice. You usually have exclusive rights in your territory. The franchisor won't sell any other franchises in the same territory. Financing the business may be easier. Banks are sometimes more likely to lend money to buy a franchise with a good reputation.

© 2015 albert-learning.com Franchise Disadvantages of Franchising : Costs may be higher than you expect. The franchise agreement usually includes restrictions on how you can run the business. The franchisor might go out of business. Other franchisees could give the brand a bad reputation, so the recruitment process needs to be thorough. You may find it difficult to sell your franchise - you can only sell it to someone approved by the franchisor. All profits (a percentage of sales) are usually shared with the franchisor.

© 2015 albert-learning.com Franchise Types of Franchises : Business Format Franchises : In business format franchises (which are the most common type), a company expands by supplying independent business owners with an established business, including its name and trademark. Fast food restaurants are good examples of this type of franchise. Prominent examples include McDonalds, Burger King, and Pizza Hut.

© 2015 albert-learning.com Franchise Manufacturing Franchises : Through manufacturing franchises, a franchiser grants a manufacturer the right to produce and sell goods using its name and trademark. This type of franchise is common among food and beverage companies. For example, soft drink bottlers often obtain franchise rights from soft drink companies to produce, bottle, and distribute soft drinks.

© 2015 albert-learning.com Franchise Product Franchises : With product franchises, manufactures control how retail stores distribute their products. Through this kind of agreement, manufacturers allow retailers to distribute their products and to use their names and trademarks. To obtain these rights, store owners must pay fees or buy a minimum amount of products. Tire stores, for example, operate under this kind of franchise agreement.

© 2015 albert-learning.com Franchise Common Mistakes of Prospective Franchisees :  Not analysing the local market in advance.  Not making thorough due diligence of the franchisor  Not choosing the right location  Not reading, understanding and/or asking questions about the franchisee agreement and other legal documents  Not understanding the responsibilities of a franchisee and the rights and obligations of a franchisor  Not seeking sound legal and financial advice

© 2015 albert-learning.com Franchise Why Franchise : Franchises offer important pre-opening support :  Site selection  Design and construction  Financing (in some cases)  Training  Grand-opening program

© 2015 albert-learning.com Franchise Why Franchise : Franchises offer on-going support :  Training  National and regional advertising  Operating procedures and operational assistance  Supervision and management support  Increased spending power, access to bulk purchasing and economies of scale

© 2015 albert-learning.com Franchise Reviewed By Reviewed On Comments / Changes Made Ankita Added words in the incomplete Home assignment