1. Franchising

2. … understand the
principles of
franchising as it
applies to small
business start-ups
…… appreciate the
pros and cons of
using a franchise as
a way of starting a
new business
Learning objectives:
be able to …
... assess franchising against
other business start-up options

3. Definitions
Franchise
Franchise
The right given by one
The right given by one
business to another to sell
business to another to sell
goods or services using its
goods or services using its
name
name

4. Definitions
Franchisee
Franchisee
A business that agrees to
A business that agrees to
manufacture, distribute or
manufacture, distribute or
provide a branded product
provide a branded product
under licence from another
under licence from another
business
business

5. Definitions
Franchisor
Franchisor
A business that gives others
A business that gives others
the right to sell its product, in
the right to sell its product, in
return for a fixed sum of
return for a fixed sum of
money or a royalty payment
money or a royalty payment

6. Task 1: Paired task
 In pairs, use your notebooks to find out the names
of businesses you are familiar with which operate
as franchises
 Try to find one example in each of the following
categories:
- food
- hair and beauty
- children / education
 Record your findings on your worksheet and be
prepared to feedback your ideas to the rest of
the class

7. Task 2: Paired task
 Investigate the franchises on your worksheet and
identify:
- the costs of buying the franchise
- potential revenues and profit from operating
the franchise
- what benefits there might be from buying the
franchise
 Record your findings on your worksheet and be
prepared to feedback your ideas to the rest of
the class

8. Benefits of a franchise
Training and
Training and
equipment
equipment
Back up
Back up
services
services
National
National
marketing
marketing
Less risk of
Less risk of
failure
failure
Finding
Finding
customers
customers
Recognised
Recognised
brand name
brand name

9. Task 3: Group task
 In your table groups, try to identify the
disadvantages of start up a business by buying a
franchise
 Record your findings on your worksheet and be
prepared to feedback your ideas to the rest of
the class

10. Disadvantages of a franchise
High initial
High initial
investment in
investment in
some cases
some cases
Support and
Support and
back up may
back up may
be limited
be limited
Success is
Success is
never
never
guaranteed
guaranteed
Lack of scope
Lack of scope
for initiative
for initiative
and creativity
and creativity
‘Royalty’ fees
‘Royalty’ fees
need to be
need to be
paid
paid
Lack of
Lack of
freedom
freedom