Franchising

Learning objectives Describe what is meant by a franchise Identify the advantages and disadvantages of a franchise business Justify why a franchise business is better than a normal start-up

What is a franchise? A franchise is where a large company (I.e McDonalds) allows smaller businesses to use their name They can be identified by the following features: > An agreement between a franchisor and franchisee

How a Franchise works Franchisor allows the use of their business name for an agreed length of time Franchisor provides materials, training and advice Franchisee must provide the money to start their business Franchisee must make regular payments to the Franchisor

Is it a good idea to be a franchise? AdvantagesDisadvantages Good chance of successFranchise can be removed Easier to borrow money because of proven success Franchisee cannot make all of the decisions Most problems will have been overcome already Cannot sell the franchise without permission Support is available from the franchisorHave to make royalty payments to the Franchisor Advertising is organised and paid for by the Franchisor Supplies have to be purchased from the Franchisor – which may be expensive Franchisees are usually small – so can pay attention to detail

Main activity – Franchise presentation You are a group of entrepreneurs, you want money to invest in a real franchise opportunity Go to and have a look at some opportunitieswww.franchisedirect.co.uk Make a powerpoint showing: 1) What franchise you want to set up 2) What the advantages and disadvantages of a franchise 3) Why your franchise idea is better than a normal start-up business