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Local Franchise Operations

The Definition of a Franchise

• A business that uses the name, logo and trading systems of an existing successful business

Characteristics of a Franchise• It is formed when a successful idea is sold or

rented to other people known as franchisees. • It is an already existing business idea. • Franchises normally operate in many different

countries and are usually large in number. • An initial fee and regular royalties are paid to

the franchisor. • The franchise is identical to the original

company.

Benefits of a Franchise Operation

• There is a brand name appeal for the product or service being sold.

• The franchisee receives assistance from the franchisor in terms of advice and training.

• There is normally centralized buying so all the Franchisees benefit from the discounts associated with buying in bulk

• The franchisee benefits from the franchisor's marketing which boosts his sales and revenue.

Drawbacks of a Franchise Operation

• There is normally a requirement to follow standardized operations.

• The line of products is restricted. • The franchisee has to pay royalties (fees) to

the franchisor.• A franchisee may suffer from the negative

activities of other franchisees or the franchisor