Franchisee: a business person whom purchases the rights to use the companies brand image and authorisation to sell its products and services. Benefits to the franchisee... What Costa Coffee gives to the franchisee.
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.
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
...hungry? In many cases the consumer would choose a store they recognise... ...where do you choose to eat? Back
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?
From the perspective of the Franchise: Franchisee Costa Coffee
Benefits to the franchise... What franchisee gives to the Cost Coffee (franchise).
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.
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