Introduction To Business - Franchises And Franchisors

Question 1

Explain what is meant by a franchise

Answer 1

the right or license granted to an individual or group to market a company’s goods or services in a particular territory

Question 2

Distinguish between franchisers and franchisees

Answer 2

While a franchisor is an established entrepreneur with a licensed business model, a franchisee is a person or corporation that owns and operates the business using the business model licensed by the franchisor

Question 3

Facotors that affect the use of franchising to a business

Answer 3

Competition
Economy
Location
Managers of the franchises

Question 4

Advantages and disadvantages of franchising

Answer 4

Advantages- managers are chosen for suitability, easier way to expand, more effective method for economies of scale
Disadvantages- managers can make the business look bad, costs are high, conflict over profit margins between the franchiser and franchisee

Question 5

What is a co-operative

Answer 5

business or organisation that’s owned and controlled by its members, to meet their shared needs

Question 6

Advantages and disadvantages of co-operatives

Answer 6

Advantages-liabilities for members is limited, structure encourages shared responsibility and input
Disadvantages-decision making is longer, profit margins are shared so minimal gain