Understanding Franchising: A Business Model

What is the role of a franchisor in a franchise business?

• Pays ongoing fees to the franchisee

• Operates all locations of the franchise

• Purchases rights to use the franchisee's brand

• Provides training and support to the franchisee

Which company is noted as the most successful franchise globally?

• Starbucks

• Subway

• McDonald's

• Skechers

What is a major advantage of buying a franchise like McDonald's?

• Avoiding training programs

• Establishing a new brand

• Freedom to set prices

• Utilizing an established brand

What is the range of annual sales for a typical McDonald's franchise in the UK?

• £2 to £5 million

• £1 to £3 million

• £500,000 to £2 million

• £1.5 to £4.3 million

What type of support does McDonald's provide to its franchisees?

• Financial loans

• Product innovation

• Legal advice

• Marketing and advertising

How much can the combined ongoing fees amount to in a McDonald's franchise?

• Up to 30.3% of net sales

• Up to 35% of net sales

• Up to 25% of net sales

• Up to 20% of net sales

What is a significant drawback of purchasing a franchise?

• Simpler business operations

• No need for advertising

• Lack of brand recognition

• High initial investment

What aspect of the business is not controlled by a McDonald's franchisee?

• Interior design of the restaurant

• Hiring of staff

• Product range and pricing

• Location of the restaurant

What does franchising offer compared to starting a business from scratch?

• Complete creative freedom

• Lower risk and established systems

• No ongoing fees

• Higher risk but higher control

What is a key benefit of the franchise model?

• Low initial costs

• Quick setup time

• Access to a proven business model

• No ongoing royalties