Franchising - Unit 1

Question 1

What is a franchise?

Answer 1

The right given by one business to other businesses to sell goods or services using its name. They remain as an independent business but they must abide by their rules.

Question 2

What’s a franchisor?

Answer 2

The business that gives franchisees the right to sell it’s product or service.

Question 3

What is a franchisee?

Answer 3

A business that agrees to manufacture, distribute or provide a branded product, under licence by a franchisor.

Question 4

What does the franchisee get when they buy a franchise? Name at least 3.

Answer 4

• An established brand name
• Training
• Equipment
• Ongoing support
• Access to goods and services
• Advertising and promotion
• Operate in an exclusive area

Question 5

What are at least 2 drawbacks of owning a franchise?

Answer 5

• Start up costs can be expensive
• Royalty payments
• Complicated application process
• Lack of control
• Limited flexibility to make your own decisions

Question 6

Factors in choosing a location might include. Name at least 2.

Answer 6

• Proximity to competition
• Busy (passing trade)
• Access (parking, etc)
• Cost