franchises

could you explain what one is please?

Answers
Hello :) A franchisee (the person taking out the franchise) uses the successful business model set out by the franchisor. The franchisee pays to set up a shop in the franchisor's chain. e.g. McDonalds and KFC are franchises. Given a person has enough money, they can pay a set amount to the company to open one of these stores - they may then have to pay a certain amount a year too. The franchisor (so McDonalds/KFC) then makes money, as the franchisee has to buy all the products to sell from them. - For example, every McDonalds you go into, all the burgers taste the same. This is because the franchisee must follow instructions on how to cook the products, and also buy them from the company. This is the same with wrappers (all KFC wrappers are the same) and also furniture for the shop (like them strange seats that are supposed to be comfortable, but always break in McDonalds!)
amyatkinson
02 October 2012
This arrrangement allows the company to make money, as all products must be bought from them and allows the franchisee to make money without the risk of starting up their own company - that may fail. They also have the reputation of the franchisor, which will make them a popular choice anyway. To buy into a franchise costs a lot of money and you have to be commited. At KFC in the past, you had to prove you had £5 million in the bank, and the potential to open 10 restaurants in the next few years. Of course, there are drawbacks though, if the company/francisor becomes unpopular, the person who has bought into the company will lose money also. If you don't understand what I've said, or need me to explain more clearly, just contact me and I'll be happy to help further :)
amyatkinson
02 October 2012
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