Podcast
Questions and Answers
What is the main benefit for the franchisor in terms of revenue?
What is the main benefit for the franchisor in terms of revenue?
- Monthly royalties paid by the franchisee (correct)
- Initial fee paid by the franchisee
- Share of profits from the franchisee's business
- Interest on loans provided to the franchisee
What is a potential risk for the franchisor due to the franchisee's actions?
What is a potential risk for the franchisor due to the franchisee's actions?
- The franchisee may not expand the business quickly
- The franchisee may not operate in a satisfactory manner (correct)
- The franchisee may not pay the initial fee
- The franchisee may not share the risks and uncertainty
Why is it important for the franchisor to carefully draw up the franchise agreement?
Why is it important for the franchisor to carefully draw up the franchise agreement?
- To prevent disputes from occurring (correct)
- To ensure the franchisee pays the initial fee
- To ensure the franchisee expands the business quickly
- To ensure the franchisee pays monthly royalties
What is a disadvantage of franchising for the franchisor in terms of control?
What is a disadvantage of franchising for the franchisor in terms of control?
What is a benefit of franchising for the franchisor in terms of expansion?
What is a benefit of franchising for the franchisor in terms of expansion?
What must be paid by the franchisee even if they make a loss?
What must be paid by the franchisee even if they make a loss?
What is a potential consequence of poor recruitment, support, and servicing of franchisees?
What is a potential consequence of poor recruitment, support, and servicing of franchisees?
Why is it important for the franchisor to have a well-drafted franchise agreement?
Why is it important for the franchisor to have a well-drafted franchise agreement?
What is a potential drawback of franchising for the franchisor in terms of the franchisees' operations?
What is a potential drawback of franchising for the franchisor in terms of the franchisees' operations?
What is an advantage of franchising for the franchisor in terms of growth?
What is an advantage of franchising for the franchisor in terms of growth?
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Study Notes
Benefits for the Franchisor
- Increased revenues through monthly royalties, which are paid regardless of the franchisee's profit or loss
- Rapid market and sales expansion achieved at a relatively low cost
- Shared risks and uncertainty with franchisees
Disadvantages for the Franchisor
- Franchisees may not operate satisfactorily, damaging the business's reputation and leading to bad PR
- Potential disputes arising from poorly drawn-up franchise agreements
- Difficulty in effectively recruiting, supporting, and servicing multiple franchisees, leading to dissatisfaction and poor practice
- Limited control over the day-to-day running of the business
Benefits for the Franchisor
- Increased revenues through monthly royalties, which are paid regardless of the franchisee's profit or loss
- Rapid market and sales expansion achieved at a relatively low cost
- Shared risks and uncertainty with franchisees
Disadvantages for the Franchisor
- Franchisees may not operate satisfactorily, damaging the business's reputation and leading to bad PR
- Potential disputes arising from poorly drawn-up franchise agreements
- Difficulty in effectively recruiting, supporting, and servicing multiple franchisees, leading to dissatisfaction and poor practice
- Limited control over the day-to-day running of the business
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