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 common?

Ok they are all franchises but

why should I buy a franchise and
not set up in business on my
own?

Right well let me explain the

main features of a franchise
to you.
THE ADVANTAGES & DISADVANTAGES OF A
FRANCHISE

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 trust.
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 franchise.

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
franchise?

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 own.

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?