Franchise

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  • Franchise
    • Franchise is when a business gives the right to supply its products or service to another business
    • Franchisee has authorisation to sell another company's product or service in a particular place
    • Franchisor is the owner of a trading format which it allows other businesses to use
    • Advantages of franchise: established brand, less risk of failure, product is supplied, easier gain to finance, gets advice and support from franchisor and feeling of satifiscation
    • Disadvantages of franchise large percentage of profits given to franchisor, less control and freedom over decisions, pay royalities, competiting with other franchises, growth is limited
    • Benefits to franchisee is trade under an established brand, easier to raise finance, low start up risk and marketing is already in place
    • Franchisee drawback is reputation of the franchisor affect your business, less control over decisions, higher costs than expected, difficult to sell and less financial rewards
    • Franchisor benefits get a large percentage of the profit, get royalities, expansion is easier, get a larger share of the market, still in control
    • Franchisor drawbacks reputation may be damaged, expensive to monitor and profit has to be shared

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