ECONOMICS
ENTREPRENEURS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Owners pay a large franchise fee up-front to “buy-in”
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Owners spend a lot of in the beginning getting things up and running
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The company has wide-spread name and brand recognition
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Owners are locked into franchise rules, food, menu, uniforms, etc
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Detailed explanation-1: -A franchise provides an established product or service which may already enjoy widespread brand-name recognition. This gives the franchisee the benefits of a pre-sold customer base which would ordinarily takes years to establish.
Detailed explanation-2: -The primary reason most entrepreneurs turn to franchising is that it allows them to expand without the risk of debt or the cost of equity. First, since the franchisee provides all the capital required to open and operate a unit, it allows companies to grow using the resources of others.
Detailed explanation-3: -The franchisor provides an established business to the entrepreneur with low financial risk. The entrepreneur can take a franchisee with the low start-up cost of an existing brand of the parent company. It provides an ability for an entrepreneur to become his own boss and gain profits with the inbuilt customer base.
Detailed explanation-4: -Little to no industry experience is necessary. Existing customer base and brand awareness. Lower risk than starting an entirely new business. Support from the franchise owner. Ample opportunities for expanding your business to different franchise locations. 30-Aug-2021
Detailed explanation-5: -Advantage #1: Proven Business Model & Operating Procedures. Advantage #2: Access To Training & Support. Advantage #3: Start Generating Income Quickly. Disadvantage # 1: Rules And Strict Guidelines. Disadvantage #2: Reputation.