Franchising flashcards

Question	Answer
The person buying the franchise is called	Franchisee
The business selling the franchise is called	Franchisor
The main reason that a franchisor would franchise their business is that ...	it helps rapid expansion in a wider geographical area
The initial franchisee paid by the franchisee provides the franchisor with	Easy, cheap expansion captial
The ongoing payment paid to the franchisor by the franchisee are called	Royalties
Royalties are calculated as a % of	Sales Revenue
In addition to royalties the franchisee may also pay what to the franchisor	Advertising levy
The main advertages in buying a franchise are	Less Risk (established brand) Easier to raise finance * Support from the franchisor (training, promotional materials)
The main reason it is easier to raise finance as a franchisee is because	Banks will be more likely to lend as there is an already proven business model (less risky)
The way most franchises are allocated is by	Geographical location
It is impossible to franchise a business if they don't have a strong	Brand
The disadvantages of franchising your business are	* Loss of control * High initial costs * Harder to innovate

Resource summary

	Created by edougherty about 9 years ago