Business Studies - AQA - GCSE - Franchisee and Franchisor

Business Studies - AQA - GCSE - Franchisee and Franchisor

1. Franchisee

   • Disadvantages
     • Has to abide by the franchisor's rules
     • A percentage of all profits go to the franchisor
     • Costs can be great
       • For example, McDonalds - Paying for the name, the furniture, the signs, etc.
     • Restricted territory of promotion
     • Ongoing payment fees to the franchisor
   • Advantages
     • Possibility to get many customers from the start
       • Brand recognition/well-known names
     • Relationships with suppliers have already been established
     • Good way to find talented workers
     • Management training
     • Assistance with site selection, building, etc.
     • Ongoing support from the franchisor

2. Franchisor

   • Disadvantages
     • Confidential information is shared with franchisees
     • Minimal control over managers
     • 'Shared' ownership
     • Loss of flexibility as business grows
     • Risk of franchisee tarnishing public image if they do not deliver (e.g. poor customer service, etc.)
   • Advantages
     • Cost effective labour force
     • Get money without having to run the business themselves
     • Franchisees own their business, more commitment
     • Franchisee advertises brand by owning business