Franchising

Franchisor --> license --> franchise

Franchisor (e.g. Dominoes Pizza) allows Franchisee (e.g. "Local Business") to sell products.

• Still your own business
• Tested and developed format and brand
• Advice, support and training
• Easier to raise finance
• No industry expertise required
• Buying power of a franchisor
• Lower risk of market entery and lower failure rate

• Not cheap! Initial fees and royalties plus commission
• Restrictions on actions, including selling
• Problems selling business on
• Long term rewards for hardwork
• What happens if a franchisor fails?

• Operating Costs
• Inital fee (£5k - 200k)
• Service fee, % of profit
• Mark-ups - buying from franchisor