Types of organisations Flashcards
Franchises (11 cards)
What is a franchise?
A franchise is a joint venture between a franchisor and a franchisee.
What does the franchisor provide to the franchisee?
The franchisor provides the knowledge and expertise to help the franchisee replicate the business success.
What are some advantages of franchising?
Advantages include faster growth, lower risk, lower capital outlay, lower operating costs, better performance, and strength in numbers.
How does franchising allow for faster growth?
Franchising allows small business owners to expand more quickly and cost-effectively than opening further company outlets.
Why is opening a franchise considered lower risk?
Opening a franchise is less risky because the franchisee adopts a proven business model and sells a well-known product.
What does lower capital outlay mean in franchising?
Lower capital outlay means that expansion mainly comes through the investment of franchisees, costing less to grow.
What is a disadvantage of having many franchises?
The more franchises opened, the less control the franchisor has over the quality and consistency of the brand.
What could poor performance by some franchisees lead to?
Poor performance by some franchisees could give the brand a bad reputation.
What are ongoing costs for a franchisee?
Franchisees have to pay continuing management service fees to the franchisor.
What is a common restriction in franchise agreements?
Franchise agreements usually include restrictions on how the franchisee can run the business.
What is a risk related to the franchisor?
The franchisor might go out of business, which poses a risk to the franchisee.
