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Business Studies IGCSEPDF 124
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Aspect
To the
Franchisor
Advantages
- Rapid expansion with low setup
cost.
- Regular income from franchise
fees and royalties.
- Franchisee understands local
market better.
- Builds brand presence worldwide.
Advantages:
● Reduces risk and costs of entering a new market.
● Combines expertise and local knowledge.
● Access to existing distribution channels.
● Shared investment and profits.
Disadvantages:
● Decision-making can be slow due to different business cultures.
● Mistakes by one partner can damage both brands.
● Potential for disagreements over profit-sharing or management.
Disadvantages
- Profit shared with franchisee.
- Risk of inconsistent service
damaging brand reputation.
- Loss of control over local
operations.
- Must provide training and
supply materials.
2. Franchising / Licensing
A franchise is when the franchisor (original business) allows another person or company
(the franchisee) to use its name, logo, and business model for a fee and share of profits.
Common Examples: McDonald’s, KFC, Domino’s, and Subway.