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What is a franchise?
Do you know what a franchise is or a franchisee ?
Challenge yourself and find out what you know or what you will know.
The options for start-up and small businesses
There are a number of different options when setting up a new or small business. These may depend on the size of the business, the number of owners and the level of risk owners are willing to take.
What is a Franchise?
A franchise is a business that gives the right to another person or business to sell goods or services using its name. It does this by providing the person or other business with a licence. Buying into a franchise is an alternative to setting up a new business. Instead, individuals can buy into an already successful business.
To become part of a franchise, a new business must pay a fee. In return, it gets to join the franchise and benefit from using its name, products, training, marketing, and equipment. Buying into an already established brand can help to reduce the risk of the business failing for the franchisee.
What are some important key terms to remember with franchises?
franchise - the right given by one business to another to sell goods using its name
franchisee - a business that agrees to manufacture, distribute or sell branded products under the licence of a franchisor
franchisor - a business that gives franchisees the right to manufacture, distribute or sell its branded products in return for a fixed sum of money or royalty payment
What are some advantages of setting up a franchise?
the franchisee gets access to free training and marketing
the franchisee is part of an established business
it can be easier to make money
it is lower risk for a new entrepreneur than setting up a new business
What are some disadvantages of setting up a franchise?
the franchisee has to pay a percentage of its profits to the franchisor. This is known as royalties
it can be expensive to set up
the franchisee cannot make individual business decisions without consulting the franchisor
other franchises can be set up locally, which can cause competition for customers

Business GCSE REVISION key vocabulary
This is part of a GCSE Business video series. This video contains keywords and their meanings related to Business revision and understanding.