IGCSE, A Level Business Student Forum

Wilde Soup Stop (WSS) makes a range of soups and hot drinks. It owns 30 shops and has sold its franchise to 10 other shops in country Z. The Marketing Director said: ‘Results from our focus group show that being an ethical business is important’. WSS plans to extend its product range to include curries and cakes.

08 Identify and explain two advantages to WSS of selling its franchise [6]

> Cheaper way to expand
> Each franchisee pays money
> Can expand more quickly
> Widen brand awareness
> Franchisees responsible for day to day management
> Retain control of the image

[KN] Cheaper way to expand.
[APP] WSS has sold its franchise to 10 shops in country Z which means the franchisees pay to open and run the shops rather than WSS paying for new equipment and machinery for its outlets.
[AN] This lowers financial risk for WSS compared to opening more company owned shops. The money saved can be used to extend product range such as curries and cakes & also for the advertisements to further develop a brand name.

[KN] Retain control of the brand image
[APP] WSS will keep its menu, prices and taste consistent around its franchises which means wherever the customer buys from, they will enjoy the same taste.
[AN] Sustained taste would make customer buy again (if they like it) which leads towards customer loyalty. This can help WSS compete more effectively as whatever products they will introduce there will be increased chances of success.

Examiner Comments: Stand Corrected as 6/6

KN: can get a chance of expanding his/her business
APP: wss had sold his franchise to the people in country Z which is beneficial for wss to expand the business to other countries and get a chance to make his restaurant known AS MNC'S restayrant
AN: Thus due to they will get a chance to gain customer attraction in new places for e.g. country x,y,z.Also if wss sold multiple franchises it will lead to more cashflow in the comapny, moreover it also get consumer loyality as consumer might travel multiple countries and avail a chance to get same taste and differant Place.

KN: While wss sold franchises it would lead to royality gain on it
APP: It will allow wss to gain some part of profit known as royality from the franchises that he has sold to the other people.
AN: Also it will lead to wss will compete more effectively btw same franchises of the wss, which would lead to gain some royality, which would lead to have some part of the profit.