Franchise

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Type of
organization

A business that gives a right to

licenced people or businesses the
right to operate or sell it's
products,services,or knowledge in
exchange for a franchise fee.
Main characteristics
What defines a franchise?
 Main characteristics part I

2008 2010 2012

an agreement to sell the It does not give the franchisee A contract and a franchising
products or services of some the ownership of the product period
owner paying them specified or service.
fee or commission.
 Main characteristics part II

Join
2018 2020 us!

system for selectively a franchise is a patent or

It is a replication of some
distributing goods or services trademark license
successful business format.
through outlets
 Advantages & Disadvantages
OF A
FRANCHISOR
Return on Investment
Franchisors don't have to put a lot of
money into a new franchise. Most
investment money comes from the Loss of Control
Franchisees.
The franchisee being responsible for the day to
day operation of the franchise the Franchisor
Lower Risk does not have control of the day to day operation
of the franchise business
Franchise owners face lower risk than
independent business owners because
most franchises are owned by established Reputation Risk
corporations. This lowers risk may also If one franchise owner does something to damage
make it easier to access loans and helps the brand’s reputation, everyone else who has
you launch your business. bought into the same business could be tarred with
the same brush and lose sales as a result.
 Advantages &
disadvantages of a
franchisee
 Advantages
1 2 3 4
Business assistance Brand recognition Lower risk Profit
The franchisee doesn't The franchisee Due to the popularity
The franchisee will
need to go through the doesn't need to go of the franchiser that
be supported by the
troubles of gaining through the troubles allowed the opening
the Franchiser. By
customers, their trust of gaining customers, of a franchisee,
providing
& loyalty and more. their trust & loyalty higher profits are
knowledge, wisdom,
Instead, the franchisee and more. Instead, guaranteed.
guidance, assistance
will already have a the franchisee will
and such, making it
customer base which already have a
easier for the
will grant the customer base which
franchisee to start
franchise a success will grant the
and get going with
franchise a success
the franchise.
 Disadvantages

Restricting regulations Initial cost Ongoing investment Potential for conflict

Although the franchisee is In a franchise agreement,
As it does provide a great Adding on to the initial
the owner of the business, both the franchisor and
amount of profit, the cost, the franchisee will
it still restricted from full franchisee should be on the
initial cost to open up the have to pay additional cost
control by a higher same page. For when
franchisee could be high. for things like fees,
authority disagreements occur, it will
advertisement costs,
training and such. be harder battle as the
franchiser holds the upper
hand, and will lead to a
costly legal battle.
 Thanks!
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