IGCSE, A Level Business Student Forum

Q9 Analyse the advantages of a franchise for franchisor. [6]

Possible Structure:
[KN]
[AN]
[AN+]

[KN]
[AN]
[AN+]

(kn)not much experience is needed
(an) and inexperienced people are easier to train
(an+)and much much experience could mean workers are available at low cost decreasing COP
(kn)already existing customer base
(an) so no or very less advertisement cost will be their
(an+) reducing the COP further

[KN] Rapid expansion
[AN] Franchising allows a franchisor to expand their business more quickly and efficiently than traditional methods
[AN+] This accelerated expansion can lead to increased market share and revenue for the franchisor.

[KN] Reduced operational risk
[AN] Franchisees are responsible for managing day-to-day operations and the associated costs of their individual locations.
[AN+] This decentralization of operations means the franchisor can distribute the risks of running multiple units across a network of franchisees

[KN]high profits
[AN]encourage to expand more efficiently lead towards brand image and could further improve the qualit of the franchise
[AN+]because of this investment will increase and lead to more output

[KN]LESS EXPERIENCE of work needed.
[AN]less risk and franchisor could work confidently without any tension
[AN+]lead to productivity of franchisor

[KN]expansion of brand presence
[AN]By granting franchise rights the franchisor can leverage the local knowledge and resources of franchisees to establish a presence in other regions
[AN+] This can lead to increased brand recognition and customer loyalty, potentially resulting in higher overall revenue for the franchisor.

[KN]reduced financial risk
[AN]this is because it does not have to invest large amounts of capital in opening and operating new locations.
[AN+]this allows the franchisor to allocate its financial resources towards other strategic initiatives such as marketing, research and development or improving existing operations.

[KN] Increased Revenue.
[AN] Franchisors commonly collect both initial franchise fees and continuous royalties, which may be based on a percentage of the franchisee's revenue.
[AN+] As the number of franchise locations increases, this results in an ongoing and potentially lucrative source of revenue for the franchisor.

[KN] Expansion.
[AN] Franchising enables the franchisor to achieve a faster expansion of its brand and business compared to conventional approaches.
[AN+] This is because franchisees use their funds to establish new outlets, allowing the brand to expand without requiring substantial financial investment from the franchisor.

[KN] rapid expansion
[AN] Franchising allows the franchisor to expand their brand and business more rapidly than through traditional corporate-owned locations.
[AN+] Franchisees invest their own capital to open new units, reducing the financial burden on the franchisor.

[KN] Risk Sharing
[AN] The risk of opening new locations is shared with franchisees.
[AN+] If a franchisee's unit fails, it's typically their financial loss, not the franchisor's, which helps protect the franchisor's financial stability.

(Kn) increased revenue (an) the franchisor usually charges a fee for conducting operations under the brand name (an+) this gives the franchisor extra money which they can spend on other ventures

(Kn) improves brand image (an) when the brand opens in other areas especially other countries it spreads a good image abut the brand making it known as a MNC (an+) this can help increase sales as it becomes a more known and trusted brand

[KN] Brand growth and recognition
[AN] Expanding through franchising can help increase brand awareness and recognition
[AN+] as each new franchise unit contributes to the brand's visibility in the market.

[KN] brand image
[AN] by opening in many places this would create a better brand image as customer would be seeing this as a growing brand
[AN+] this would lead to improved brand image

[KN]Easier expansion
[AN]Expanding a business through franchising can make it 10 times easier and more efficient
[AN+]This may lead to higher sales as new customer base may be targeted

[KN]Less risk of running the business
[AN]As no huge amounts of capital is paid into the business it reduces the risk of running it
[AN+]Thus this gives the franchisor an incentive to invest towards the well being of the business(fund expansion)

[KN] Quicker growth of the business.
[AN] Franchising makes the business to expand more rapidly.
[AN+] Franchiser invest their own capital which reduces the financial burden on the business.

[KN] The risk is shared.
[AN] The risk can be easily shared among the franchisors.
[AN+] If one franchise fails to produces more output the loss can be recovered from a different franchise.

Kumail Alvi wrote: ↑Thu Nov 02, 2023 12:55 am [KN] Increased Revenue.
[AN] Franchisors commonly collect both initial franchise fees and continuous royalties, which may be based on a percentage of the franchisee's revenue.
[AN+] As the number of franchise locations increases, this results in an ongoing and potentially lucrative source of revenue for the franchisor.

[KN] Expansion.
[AN] Franchising enables the franchisor to achieve a faster expansion of its brand and business compared to conventional approaches.
[AN+] This is because franchisees use their funds to establish new outlets, allowing the brand to expand without requiring substantial financial investment from the franchisor.

both analysis points show no further impact of any sort

Humzah Zafar wrote: ↑Sun Nov 05, 2023 1:20 pm [KN]Easier expansion
[AN]Expanding a business through franchising can make it 10 times easier and more efficient
[AN+]This may lead to higher sales as new customer base may be targeted

[KN]Less risk of running the business
[AN]As no huge amounts of capital is paid into the business it reduces the risk of running it
[AN+]Thus this gives the franchisor an incentive to invest towards the well being of the business(fund expansion)

2nd analysis point lacks direction and impact, good first point tho

Farzan Siddiqui wrote: ↑Mon Nov 06, 2023 11:45 pm [KN] Quicker growth of the business.
[AN] Franchising makes the business to expand more rapidly.
[AN+] Franchiser invest their own capital which reduces the financial burden on the business.

[KN] The risk is shared.
[AN] The risk can be easily shared among the franchisors.
[AN+] If one franchise fails to produces more output the loss can be recovered from a different franchise.

both analysis points lack in the direction department

[KN] franchisee will know the local area
[AN] Research costs will fall and so less time will be wasted
[AN+] Hence the franchisor will find it easy to enter markets in different areas

[KN] motivated operators as the franchisee will also gain success from the business when it gains profits
[AN] Thus productivity will be high and improved customer services
[AN+] improving brand image