IGCSE, A Level Business Student Forum

Q11 Analyse the advantages of a franchise for franchisee. [6]

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

[KN]
[AN]
[AN+]

(kn) lower rate of failure
(an) the network can provide her with support advise making it less likely to fail
(an+) and as they are going a successful business their are less to no failure chances
(kn) more profit
(an) as you don't have to cover the cost investing in new premises or staff
(an+) that cost can be spent in improving service

[KN] Access to financing
[AN] Some franchisors have relationships with banks or lenders that make it easier for franchisees to secure financing.
[AN+] This can be especially helpful for individuals who may have difficulty obtaining loans for an independent business.

[KN] Exclusive territory
[AN] Many franchisors offer exclusive territories to their franchisees, ensuring limited competition from other franchise locations in the same area.
[AN+] This can enhance the franchisee's potential for success.

[KN]establishes brand and reputation
[AN]this provides immediate credibility and trustworthiness to the franchisee's business potentially leading to higher customer trust and loyalty
[AN+]the franchisee can tap into an existing customer base and benefit from the reputation built by the franchisor

[KN]training and support
[AN]this support can include everything from initial setup and staff training to ongoing assistance with marketing, operations and management
[AN+] allowing them to quickly get up to speed and run a successful business

[KN] Easy access to resources.
[AN] Franchisees can easily get bulk discounts through franchisor networks.
[AN+] This will reduce the costs of the franchisee as now he will have to invest less from his savings.

[KN] Brand Image.
[AN] A franchise attracts customers because it is already well known and if u start a business it will take some time to be known.
[AN+] Thus the franchisee has already surpassed the survival stage so the aim will be either growth or profit maximization.

[KN]bulk buying power,
[AN]franchises often benefit from apurchasing power of the entire franchise network,
[AN+]thus they can bu supplies and inventory at lower cost due to collective size of the franchise

[KN]REDUCE RISK
[an]starting a business is risk but with a franchisee some of that risk is reduced because u are using the formula for success.
[AN+]thus lead tohigh revenue and band image,

ayyan ali wrote: ↑Thu Nov 02, 2023 7:04 pm [KN]bulk buying power,
[AN]franchises often benefit from apurchasing power of the entire franchise network,
[AN+]thus they can bu supplies and inventory at lower cost due to collective size of the franchise

[KN]REDUCE RISK
[an]starting a business is risk but with a franchisee some of that risk is reduced because YOU are using the formula for success.
[AN+]thus lead to high revenue and bRand image,

You Have not explained the points correctly

[KN] brand recognition
[AN] They can benefit from the reputation and name recognition of an established brand.
[AN+] making it easier to attract customers.

[KN] training and support
[AN] Franchisees receive training and ongoing support from the franchisor.
[AN+] thus helping them learn how to run the business effectively.

(Kn) financial support (an) franchisee is provided with funds from the franchisor in order to smoothly run its operations (an+) this can help especially in the starting phase when capital is most needed

(Kn) more chance of success (an) since the firm is already well known it wouldnt be hard for it to make sales (an+) this greatly reduces the chances of failure and encourages further investment

[KN] Shared risk
[AN] by taking up a franchise that already has an higher brand image they make sales without much efforts
[AN+] results in lower risk

[KN] training
[AN] they are provided with training by the franchiser to make sure that their brand image is not effected
[AN] results in higher productivity by the business

[KN]Established brand image
[AN]An already established brand image leads to less effort and time spent on building sufficient brand image and reputation
[AN+]This may also lead to customer loyalty

[KN]Lower risk
[AN]An independent business started from scratch may have more risks of running then a franchise.This can be due to many reasons like established brand image etc
[AN+]Thus this makes running of a franchise easier as compared to a start up business

[KN] Training and support would be given.
[AN] Training is provided by the franchiser to make sure that they have skilled workers.
[AN+] This would result in higher productivity.

[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.

[KN] Establishes brand reputation.
[AN] Since franchisees gain access to an established and recognized brand, this will help attract customers more quickly.
[AN+] Thus this will lead to greater market share and customer loyalty.

[KN] Ensured growth in profitable manner.
[AN] Since business is already known this will hence ensure an further increase in sales leading to greater market share.
[AN+] Thus it will help to overcome challenges, hence making a way for higher success rate.

[kn]brand reputation already established
[an] therefore customer loyalty already existing leading to less chances' of business failure
[an+] and so not so difficult to expand
[kn] low risk of failure
[an] as business is not starting from scratch it is already Independant therefore having an established brand image
[an+] thus making it easier to overcome challenges and having a higher success rate

[KN]Easy to attract customers
[AN]The brand is already established in the market and so there is an already existing customer base
[An]hence there is low risk of failure


[KN]Franchiser pay more advertising
[AN]thus franchisee does not need to manage marketing budgets and cost of marketing remains low
[an]leading to higher profit margins