Franchising

Franchising

Definitions
1. Franchise
  1. The business Format (Product, Brand) which a franchisor allows a franchisee to use under licence
2. Franchisor
  1. The ultimate owner of the franchise format
3. Franchisee
  1. The business which is granted the right to operate a franchise on behalf of the franchisor
4. Franchise agreement
  1. Legal contract which sets out the commercial deal between franchisor and franchisee
5. Examples of UK Franchises
  1. Subway
  2. Costa
  3. Mcdonalds
  4. Dominos
  5. Interlink express
Costs of being a Franchisee
1. Initial cost varies from 25k to 100k
2. Service fee (An average of around 10% of sales paid weekly or monthly)
3. Advertising levy (A contribution from each franchisee towards the franchisor for advertising costs)
4. Mark ups (Some franchisors insist in franchisees buying good from them to sell)
Franchisee
1. Advantages
  1. Your own business
  2. Ongoing advice and support from franchisor
  3. Dont really need experience of the market
  4. Benefits from your franchisors scale
2. Disadvantages
  1. Dont own the business format
  2. Risk to franchisor going out of business
  3. Restrictions on trading
  4. Large poportions of profit has to be given to the franchisor

Resource summary

	Created by Mingetron 4000 almost 11 years ago