04 October 2015© easilyinteractive.com Business ownership Franchises Press F5 on your keyboard to launch this PowerPoint presentation

04 October 2015© easilyinteractive.com Types of business organisation * Business Organisations PrivatePublic UnincorporatedIncorporated Sole trader Partnershi p Private Limited Company Public Limited Company Public Corporations Local and Central Government Co-operative

04 October 2015© easilyinteractive.com  The diagram below can be accessed at any time in this presentation simply by clicking on the button  Click the button to return to your previous slide Types of business organisation * Business Organisations PrivatePublic UnincorporatedIncorporated Sole trader Partnership Private Limited Company Public Limited Company Public Corporations Local and Central Government Co-operative

04 October 2015© easilyinteractive.com Franchises  Article: “A fresh opportunity to ring the changes at work”, Daily Telegraph, 3/10/05  Suggested questions:  What do you thing a franchise is?  What, according to the article, are the advantages of being a small business?  What are the risks to Mike Jones of owning his own business rather than working for BT? * Due to copyright restrictions we are unable to provide the article as a PDF file however there is a print option on the webpage.

04 October 2015© easilyinteractive.com Franchise Franchiser Franchisee grants rights to use a product/name/services pays a fee/royalties for this privilege Franchise: An agreement where a business (the franchiser) sells rights to other businesses (franchisees) allowing them to sell products or use the company name *

04 October 2015© easilyinteractive.com Franchise The franchise agreement

04 October 2015© easilyinteractive.com The franchise contract  Both parties will sign a contract agreeing:  How long the arrangement will last  Conditions under which the contract may be terminated by either side  The territory covered by the agreement  What both parties agree to do within the relationship… *

04 October 2015© easilyinteractive.com The franchiser will typically agree to…  Uphold the brand image  Quality checking of franchisees  Marketing  Provide signs, fixtures and fittings  Provide training and advice *

04 October 2015© easilyinteractive.com The franchisee will typically agree to…  Pay an initial fee plus royalties on turnover (not profit!)  Purchase stock etc. from franchiser  E.g. MacDonald's:  The franchiser supplies training, marketing, packaging, food, etc. to the franchisees…  …who must purchase stock etc. from the franchiser *

04 October 2015© easilyinteractive.com Franchise Advantages and disadvantages

04 October 2015© easilyinteractive.com Advantages to the franchisee  Buys an established and successful brand name/product  Take advantage of bulk-buying  Receives training and back-up support  Specialist help available for market research etc.  Lower failure rate than independent firms *

04 October 2015© easilyinteractive.com Disadvantages to the franchisee  May have too little freedom in areas such as pricing, offers and promotions  The franchisee takes the risks  Franchisees may suffer if fellow franchisees are of poor quality  An obligation to buy inputs/services from the franchiser *

04 October 2015© easilyinteractive.com Advantages to the franchiser  Enables a business to expand rapidly  Franchisees have a ‘stake’ (motivation)  Local knowledge  Less complex structure to manage  Less risk to the franchiser *

04 October 2015© easilyinteractive.com Disadvantages to the franchiser  Franchise failure will reflect badly on the brand name  The franchisee may under-declare sales to reduce royalties *

04 October 2015© easilyinteractive.com Franchises Tasks

04 October 2015© easilyinteractive.com Task  “A franchise allows the franchisee and the franchiser to do what they do best.”  Explain this statement *

04 October 2015© easilyinteractive.com Task  Investigate a current UK franchise opportunity on the internet (whichfranchise.com > Latest franchises)  Tasks:  What does the business do?  Why is it different to other similar businesses  Try to find out how much it would cost to become a franchisee  What investment is required from you?  What will the franchiser do for you? *

04 October 2015© easilyinteractive.com Ownership and control of business Co-operatives