Define…<br />Franchise:<br />‘an authorisation to sell a company's goods or services in a particular place’. <br />
Here are some familiar logo’s...<br />All Franchise<br />
Franchisee: a business person whom purchases the rights to use the companies brand image and authorisation to sell its products and services.<br />Benefits to the franchisee...<br />What Costa Coffee gives to the franchisee.<br /><ul><li>Branding – the franchisee has the rights to use the company logo and all merchandise.
Marketing – Costa Coffee advertises on bus stops, billboards and provides the franchisee with promotional goods (buttons, t-shirts etc).
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.
Equipment and products will also be provided alongside the franchise costs.</li></ul>Branding: exclusive rights to a distinctive word or logo used by the franchisor.<br />Royalty: an amount of money the franchisee must pay the franchise every year.<br />Franchisee<br />Costa Coffee Brand<br />
...hungry?<br />In many cases the consumer would choose a store they recognise...<br />...where do you choose to eat?<br />Back<br />
Disadvantages to the franchisee...<br />Strict limitations:<br />Capital required:<br />Franchise will often limit:<br />Advertising, pricing and the products sold within the company<br />The franchisee must purchase the franchise.<br />Financial Commitment:<br />The franchisee must pay a proportion of profits to the franchisor. (Can be very high proportion).<br />What franchises have you visited this week?<br />
From the perspective of the<br />Franchise:<br />Franchisee<br />Costa Coffee<br />
Benefits to the franchise...<br />What franchisee gives to the Cost Coffee (franchise).<br /><ul><li>Brand becomes well known from exposure of new stores.
They can expand without extensive financial liability due to the franchisee’s capital input – reduced risk.
Earn money from the initial process of franchising the brand.</li></ul>Disadvantages to the franchise...<br />No complete financial reward<br />Loss of control<br />The franchisee takes a majority percentage of profit.<br />Care must be taken when choosing franchisees. Badly run businesses could lead to brand disruption<br />