Notes on Franchises

2. Do you recognize any of
these?

4. How about these?

5. Local Franchise Operations

6. The Definition of a Franchise
• A business that uses the name, logo
and trading systems of an existing
successful business

7. Characteristics of a Franchise
• It is formed when a successful idea is sold or
rented to other people known as franchisees.
• It is an already existing business idea.
• Franchises normally operate in many different
countries and are usually large in number.
• An initial fee and regular royalties are paid to
the franchisor.
• The franchise is identical to the original
company.

9. Benefits of a Franchise Operation
• There is a brand name appeal for the product
or service being sold.
• The franchisee receives assistance from the
franchisor in terms of advice and training.
• There is normally centralized buying so all the
Franchisees benefit from the discounts
associated with buying in bulk
• The franchisee benefits from the franchisor's
marketing which boosts his sales and revenue.

10. Drawbacks of a Franchise
Operation
• There is normally a requirement to follow
standardized operations.
• The line of products is restricted.
• The franchisee has to pay royalties (fees) to the
franchisor.
• A franchisee may suffer from the negative
activities of other franchisees or the
franchisor