1. Chapter 4.2 Own a Franchise or Start a Business
Mrs. Leonard
Entrepreneurship

2. Franchise Ownership
A ______________ is a legal agreement that gives an individual the right to market a company’s products or services in a particular area
Ex. Jiffy Lube stations, McDonald’s
________________ is a person who purchases a franchise agreement
________________ is a person or company that offers a franchise for purchase
More than ____________ people in the U.S. own franchises
Franchising opportunities are available in every field, from motels to pet stores

3. Sources for finding out about Franchise Ownership and Opportunities
Franchise Opportunities ______________ – publication of the U.S. Department of Commerce
Lists more than 1,400 franchise opportunities by category
Provides information about costs and capital requirements
___________ Guide to Buying a Franchise
Publisher by the Federal Trade Commission
Books on franchising available at your public library
The ________________________
Magazines such as ____________, Barron’s Business Start-Ups, Entrepreneur, and Inc

4. Operating Costs of a Franchise
_______________ Franchise Fee – fee the franchise owners pays in return for the right to run the franchise
Fee can run anywhere from a few thousand to a few hundred thousand dollars (usually _______________)
______________ Costs – costs associated with beginning a business
Include the costs of renting a facility, equipping the outlet, and purchasing inventory

5. Operating Costs of a Franchise
_____________ Fees – weekly or monthly payments made by the owner of the franchise to the seller of the franchise
Payments usually are a percentage of your franchise’s income
______________ fees – fees paid to support television, magazine, or other advertising of the franchise as a whole

6. Advantages of Owning a Franchise
An entrepreneur is provided with an _____________ product or service
Allows entrepreneurs to compete with giant companies
Franchisors offer _______________, technical, and other assistance
On-site ____________ or classes, aid with starting the new business and handling daily operations, and tips on crisis management
Offer help on everything from site selection and building design to equipment purchase and recipes
Most maintain a toll-free telephone number that franchises can call for ______________

7. Advantages of Owning a Franchise
Equipment and supplies can be less _________________
Because franchises are part of large chains, they can purchase in bulk
A guarantee of ____________________ attracts customers
Franchise contract mandates a certain level of quality, consumers know what they can walk into a franchise anywhere and receive the same product and service

8. Disadvantages of Owning a Franchise
Franchises can cost a lot of ____________ and cut down on profits
Initial ________________ is needed to purchase a franchise business is high
Some of the profits you earn as a franchise owner are returned to the franchisor as royalty fees
Owners of franchises have less _______________ to make decisions than other entrepreneurs
Many business decisions have already been made
Products and services, prices set by franchisors

9. Disadvantages of Owning a Franchise
Franchisees are dependent on the performance of other franchisees in the chain
If other franchises run sloppy operations, customer opinions of the chain will decline – which will make customers stop going
The franchisor can _____________ the franchise agreement
If franchisee fails to pay royalty payments or meet other conditions, the investment in the franchise could be lost
If the franchise ____________, the franchisor can choose not to renew the agreement

10. Evaluating a Franchise
Ask these questions to evaluate a specific franchise
What is the projected _____________ for the franchised product or service in the area I want to locate in?
Will I be guaranteed an exclusive ______________ for the duration of the franchise term, or can the franchisor sell additional franchises in the territory
What are the costs and ____________ fees associated with the franchise
How _________________ have other franchises in the area been? What do other franchisees think of the franchisor?

11. Evaluating a Franchise
How long has the franchisor been in business? How ____________ is the franchisor?
What services does the franchisor provide? Will the franchisor help me with ____________, merchandising, and site selection?
Are benefits provided by the franchisor worth the loss of _________________ and the ________ of purchasing the franchise?
What happens if I want to cancel the franchise agreement?

12. Evaluating a Franchise
Some franchisors make _________ or misleading claims about their franchises
Carefully ________________ the documents the franchisor gives you
Be suspicious of any company that will not back up its claims with ____________ financial statements
Beware of high-pressure sales tactics – never allow yourself to be _______________ into making the decision to quickly
Consult an ______________ before signing a franchise agreement, these are complicated documents
Who is interested in starting a franchise?
On page 88 look at table of top 10 Franchises – which would you want to open?

13. Starting your own business
As an entrepreneur, you might want to establish a business of your own
Who wants to start their own business?

14. Advantages of Starting your own Business
Entrepreneurs who start their own business get to make _____________ about everything from where to locate, prices to charge, and employees to hire
They are completely ______________ and create their own destinies
Entrepreneurs find great ______________ in starting their own business
Attracted to the challenge of creating something new
Feel triumph when their business turns a __________

15. Disadvantages of Starting your Own Business
There is no _____________ that customers will purchase what you offer –you must estimate the demand for your product or service
Must make _____________ that other types of entrepreneurs need not make
What product/service to offer, the location, what employees to hire

16. 4.2 Assessment Thinking Critically 4.2 (p.91)
Questions 1-3
Type the questions and your answers (answer in bold)
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4.2 true/false and multiple choice worksheet
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