A franchise is an authorization allowing a business to sell a company's goods or services in a particular location. A franchisee purchases the rights to use a company's branding and authorization to sell its products and services. Benefits to the franchisee include branding, marketing support, and business management support from the franchisor. However, franchisees also face strict limitations on advertising, pricing, and products from the franchisor. They must also pay an initial franchise fee and ongoing royalty fees, which can be a high percentage of profits. Benefits to the franchisor include expanding the brand recognition and reducing financial risk through the franchisee's capital investment, while earning initial franchising fees. However, franchisors also lose some

1. Franchise Unit 1 - Business Structure Ref Sheet: #U1-01

2. Define… Franchise: ‘an authorisation to sell a company's goods or services in a particular place’.

3. Here are some familiar logo’s... All Franchise

5. Marketing – Costa Coffee advertises on bus stops, billboards and provides the franchisee with promotional goods (buttons, t-shirts etc).

6. Business management support – if the franchisee were to fail, Costa Coffee as a franchisee would lose out as royalties and an agreed percentage of profits would not be paid to Costa Coffee.

7. Equipment and products will also be provided alongside the franchise costs.Branding: exclusive rights to a distinctive word or logo used by the franchisor. Royalty: an amount of money the franchisee must pay the franchise every year. Franchisee Costa Coffee Brand

8. ...hungry? In many cases the consumer would choose a store they recognise... ...where do you choose to eat? Back

9. Disadvantages to the franchisee... Strict limitations: Capital required: Franchise will often limit: Advertising, pricing and the products sold within the company The franchisee must purchase the franchise. Financial Commitment: The franchisee must pay a proportion of profits to the franchisor. (Can be very high proportion). What franchises have you visited this week?

10. From the perspective of the Franchise: Franchisee Costa Coffee

12. They can expand without extensive financial liability due to the franchisee’s capital input – reduced risk.

13. Earn money from the initial process of franchising the brand.Disadvantages to the franchise... No complete financial reward Loss of control The franchisee takes a majority percentage of profit. Care must be taken when choosing franchisees. Badly run businesses could lead to brand disruption

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