Franchisees

Franchise –  Is a business organization which signs a contract whith a firm which already has an established product or service. The firm then gives the permision for the business to operate under their name and with the firms (Franchisors) Guidance, for a fee

Franchisee –  A person who purchases a franchise, and eaither pays a flat fee or percentage of the money they earn to the Franchisor in order to be able to operate under their name.

Franchisor – A company that alows an individual to run/operate under their name. But the franchisor still owns the company and products but gives the person the right to operate under their company name.

Royalty payment – A payment/charge made for the use of a franchise by a franchisor , and is usually paid as percentage of the money that the company which is operating under the franchisors name makes.

Advantages & Disadvantages of Setting up a Franchise

Advantages – The Franchise already has a reputation and maybee even worldwide, so first of all you don’t need to build a reputation and also if there are tourists they might recognise your franchise from other countries. Also it is already usually well established and will require less cost then setting it up as your own business and has a much smaller chance of failure.

Disadvantages- Profits will be less than if you owned the business because you have to pay royalties. Also the reputation of the franchise is in the hand of your Franchisees, so if a customer visits a run-down location of the same franchise they might get put of of going to the franchise again.