Franchies

Question 1

Franchise
Advantages
Disadvantages

Answer 1

A franchise is the right even by one business (the franchisor) to another (the franchisee) to sell goods or services using its name

Advantages of being a franchisee
More customers due to using a successful brand name and products

Support, training and advice from the franchisor

Advantages of a franchisor
Risk free income from initial fees and royalties

Can expand without paying to set up new branches

No liability at all if a franchisee’s business fails

Disadvantages of a being a franchisee -
Additional costs - initial fee and regular royalties (based on revenue)

Less freedom in how you run the business

Your business can suffer if the brand name becomes less popular

Disadvantages of being a franchisor
Only earns the royalties instead of all the profits from new branches
The whole business could lose popularity of one branch gives it a bad name