What are Franchises all about by NbX8aK7u


									What are Franchises
All About?
A franchise is an agreement that allows
you as a franchisee to buy the rights to operate your
business in the style of an existing business.
What do all of these famous brands all have in

                            Ok they are all franchises but
                            why should I buy a franchise and
                            not set up in business on my

             Right well let me explain the
             main features of a franchise
             to you.

            If I want a pizza and I have
            a choice between these
            two restaurants which one
            am I likely to use and why?

                         Oh goody I luv a quiz!
                         What’s the answer?
                         What’s the answer!?

Ok well you would be more likely to visit Domino’s Pizza
simply because it is a famous brand that you know and
This means that if you buy a franchise then you are
going to find it much easier to attract customers and
therefore you have a much lower risk of failure!
                           Hmm is that the only
                           benefit? I want to be my
                           own boss.

                            Well just because you are part of
                            a franchise does not mean that
                            you cannot be your own boss!

   You make all of the decisions
   in the business and you can
   employ your own staff.

You are responsible for
staffing, stock, quality,
customer service and the
day-to-day running of the

                             Sounds cool....like me!
                             But wait how much is
                             this going to cost me?

                             The cost of buying a franchise
                             depends upon how famous the
                             brand is that you are trading
                             under. Dominos Pizza will cost
                             you approx. £250,000.
       Oh you will need to pay a fee
       each year for using the brand
       called a ROYALTY.

                              What about training and all
                              of the equipment,
                              advertising and products?

      The Franchisor will provide you
      with all of this so don’t panic. They
      will also tell you what prices to
      charge and layout some rules to
      operating their franchise.

The advantage of a franchise
for the franchisor is that this
gives them a quick and
cheap means of expansion.
They will lay out rules though as to how to run the
business to make sure that you are not damaging their
brand’s reputation, so you do not have 100% control
over decisions but you have less risk of failure!
                           Will banks lend me the
                           money to buy a

                           Well they might not lend you the
                           entire amount but they are
                           more likely to lend to you as you
                           are less risky than setting up a
                           totally new business on your

              So is a franchise right
              for me then?

Well it really all depends upon
what you want to achieve in
business. If you want to have
total control over all business
decisions then a franchise is
wrong for you!

Also remember that you will need a lot of money to set
up as a franchise and this is no guarantee of success.
The franchisor will expect a slice of your annual profits
(royalty) and some franchises might not offer you all of
the training and support that you need.
              Bob the Blob’s Question Time

1. What is meant by the term ‘royalty’?

2. Does a franchise owner have complete control?

3. Explain why a franchise is less likely to fail.

4. What are the main benefits of franchising?

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