Business Studies Collins Revision Guide. - StudyGuide.PK

FORMS OF BUSINESS (1)Franchises●●●●●●●A franchise exists when a company sells to another business theright to use their name and sell their goods and services.A franchisee is the person who buys the right to use the name andpays a fee to the franchiser.The franchisee gains because he has to spend less money than if hehad developed his own products and brand name. There is also lowerrisk for the franchisee because the name and products are established.The franchiser gains because he can expand with lower costs andstill retain control.The franchisee may not like the fact that he has less control. He willhave to keep to a set of rules. The franchiser makes all the productdesigns and marketing decisions.The franchisee pays a royalty on the year’s turnover (the total salesrevenue) and will have to pay this whether there is any profit or not.If there is a profit he will get to keep it.Many well-known brands are franchises:5