chapter 3 franchises and co-operatives

Question 1

What is a franchise

Answer 1

a business arrangement where a franchisee is given the rights to operate a business under the name, products and support of an established company

Question 2

advantages and disadvantages for the franchiser

Answer 2

+can grow their brand and reach new locations
+ earns continuous royalty payments from the franchisee
+ franchiser has less financial risk
- may have less control
- poor performance of one franchisee can negatively impact the entire brands reputation

Question 3

Advantages and disadvantages for the franchisee

Answer 3

+gets to use a famous brand, helps attract customers
+ the risk failure is lower
- franchisee has to pay an initial fee
- must follow the rules of the franchiser

Question 4

What is a co op

Answer 4

A business that is owned and ran by its members, not private owners

Question 5

advantages nd disadvantages of a co op

Answer 5

+ members can make decisions together
+ profits are shared among members
+ often help local communities
- can be harder to raise money
- decisions can take time as all members must agree

Question 6

What is a joint venture

Answer 6

a business that is created by two or more parties, involving shared ownership

Question 7

advantages and disadvantages of joint ventures

Answer 7

+ reach other expertise and knowledge
- the objectives of each joint venture parties may change leading to conflict

Question 8

What is a strategic alliance

Answer 8

Same as joint venture but each party hopes to benefit from the arrangement

Question 10

advantages and disadvantages of a strategic alliance

Answer 10

+ new opportunities
- one company’s mistakes can harm the others reputation