franchise

Question 1

define the term ‘franchise’

Answer 1

a franchise is a business based upon the use of a brand name, promotional logos and trading method of an already existing, successful business

Question 2

advantages to the franchisee

Answer 2

1. low chance of business failure
2. benefits from the already existing business’ advertisements
3. gets support from the franchisor [the franchisor helps in training employees and helps them set up the outlet]
4. financing the business is easier

Question 3

disadvantages to the franchisee

Answer 3

1. costs are higher than expected
2. bad reputation from other franchises could affect the business.
3. selling the franchise may be difficult.
4. the franchise agreement usually includes restrictions on how the franchise could be run.

Question 4

advantages [to the franchisor]

Answer 4

1. management of the franchise is done by the franchisee.
2. the franchise is a source of revenue.
3. leads to business expansion or growth.

Question 5

disadvantages [to the franchisor]

Answer 5

1. the franchisee keeps all the revenue
2. poor management of outlet could result in bad reputation
3. the franchisor has to disclose confidential information to the franchise.

Question 6

joint venture

Answer 6

a joint venture is a business arrangement between two or more parties which agree to put resources together for a specific task.

Question 7

advantages of JV

Answer 7

1. sharing costs are good for lacking expensive projects.
2. risks are shared
3. access to greater resources

Question 8

disadvantages of JV

Answer 8

1. profit have to be shared
2. disagreements could lead to be the end of the business.
3. different cultures and management styles could lead to poor corporation