a franchise is able to control costs because:

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How is a a franchise able to control costs?

A franchise is able to control costs because: a. franchise networks have greater buying power. b. suppliers prefer to sell to franchises. c. franchises generally pay only minimum wages. d. franchisees are locked into long-term contracts with vendors. a. franchise networks have greater buying power.

What is the difference between a franchisee and a franchisor?

a. Most franchisors are located near the franchisee. b. The franchisees are technically employees of the franchisor. c. The franchisee is bound by the terms of the franchise contract. d. The franchisee is completely dependent on the franchisor for funding. c. The franchisee is bound by the terms of the franchise contract.

What are the advantages of buying a franchise?

One of the advantages of buying a franchise is that the purchaser has access to a proven business system. a. True b. False a. True The practice of putting one franchise right next to another is referred to as piggyback franchising. a. True b. False b. False Franchising offers both a proven line of business and reduced risk. a.

How does the franchisor promote the business?

the franchisor promotes the business both locally and nationally, reinforcing the brand name. Where would you suggest Xavier look for information about possible franchise opportunities? Nice work! You just studied 30 terms! Now up your study game with Learn mode. THIS SET IS OFTEN IN FOLDERS WITH...

Who has control over a franchise?

Who takes complete control of a franchise?

What is unilateral pricing?

What are the antitrust laws?

What is franchising legal claim?

What are the policies of a franchisor?

Why is there no consistency in prices across franchises?

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What are 3 advantages of a franchise?

Advantages of buying a franchise You don't necessarily need business experience to run a franchise. Franchisors usually provide the training you need to operate their business model. Franchises have a higher rate of success than start-up businesses. You may find it easier to secure finance for a franchise.

What is the main purpose of franchise?

It sells the right to use its name and idea. The franchisee buys this right to sell the franchisor's goods or services under an existing business model and trademark. Franchises are a popular way for entrepreneurs to start a business, especially when entering a highly competitive industry such as fast food.

What are the control of franchise?

The franchisor owns the trademark and business model. Upon paying the upfront fee and continuing royalties, the franchisor grants the franchisee the rights to use the trademark and business model.

What are franchisees responsible for the cost of?

In most cases, you will be obligated to pay a franchise fee to the franchisor, and you'll also be responsible for all build-out costs for your location, including furniture, fixtures, and equipment. Other start-up expenses include professional fees, contractor fees, signage, and inventory.

What is franchising and its benefits?

Franchising is basically a right which manufacturers or businesses give to others. This right allows the beneficiaries to sell the products or services of these manufacturers or parent businesses. These rights could even be in terms of access to intellectual property rights.

Why are franchises successful?

Franchises are successful as most have comprehensive franchise support packages helping their franchisees with every aspect of their new business. From the early stages of establishment, initial training and recruitment, ongoing support is available throughout the life of their business until the very end.

How can franchise quality be controlled?

4 Essentials of Quality Control in FranchisingWith strong quality controls in place, franchised locations very frequently outperform company-owned and hired manager-run locations. ... Legal Documentation. ... Franchisee selection. ... Documented systems. ... Training and support.

What control does a franchisor have?

The franchisor holds the brand ownership, including the logos, name, operational systems, and brand names for products and services. Franchisors have previously shown the viability of their concept, and they grow their business by offering franchisees the right to run their brand.

How much control does a franchise owner have?

It's a very rigid business model. It's certainly not for everyone. That said, it's important to remember that the franchisor controls almost everything. From the products/services you'll be offering, to branding, training programs and even the technology you're allowed to use.

What responsibilities does the franchisee have to the franchisor?

(2) Financial Responsibilities Franchisees are expected to bear the burden of supporting the franchise units financially. They have to provide or source funds for start-up costs, cater to the lease space agreement, and pay staff, as well as remit ongoing fees to the franchisor.

What are the three costs commonly associated with most franchises?

Let's take look at a few of them, so you can get a general idea of what they'll be.Inventory. Most franchise businesses require inventory, and it will be one of your biggest expenses. ... Payroll. ... Marketing and Advertising. ... Rent/Utilities. ... Loans.

How does a franchise make money?

A franchisor makes money from royalties and fees paid by the franchise owners. A franchise owner makes money through profits received from sales and service transactions. This is generally the left-over amount of money received from revenue after overhead costs are taken out.

What is franchise and how it works?

In franchising, a franchise owner partners with a corporate brand to open a business under the brand's umbrella. The franchisee owns and operates that location using the franchisor's brand name, logo, products, services and other assets.

How does franchising help a business grow?

Franchising can be an efficient way of growing your business. It can help you create a wider market base, increase revenue and expand your business in a cost-effective way. As an established business strategy, franchising can help you exploit a particular gap in the market before any potential competitors.

What does having a franchise mean?

A franchise enables you, the investor or franchisee, to operate a business. You pay a franchise fee and you get a format or system developed by the company (franchisor), the right to use the franchisor's name for a specific number of years and assistance.

What are the seven benefits of franchising?

Starting a Business: 7 Benefits of Franchising Your BrandCreates Capital. Franchisees use their own capital. ... Limited Liability. The franchisor avoids a lot of responsibility. ... Access to the Best Talent. ... Speeds up Expansion. ... Motivation to Succeed. ... Brand Building. ... International Expansion.

Who controls the price of goods sold by the franchisee?

The information you submit via our enquiry form is shared only with the franchise business(es) that you have selected. The franchise business will contact you by means of email and/ or telephone only to the email address and phone number you have provided.

Can A Franchisor Control Franchisee Pricing? - Law360

Antitrust challenges to maximum or minimum pricing remain viable theoretically, but — as in well-publicized disputes in recent years involving Burger King and Steak n Shake — may not always be ...

Can a franchisor control franchisee pricing? - Lexology

Franchisors can often control pricing by their U.S. franchisees within certain limits if the circumstances are right and if the franchisors proceed…

How franchisors can get a fix on price-fixing - Elite Franchise

We all know that in the franchise industry, the franchisor will seek to control almost every aspect of the franchisee’s business. But when it comes to pricing, there are important legislative restrictions that prevent franchisors from controlling the prices charged by franchisees to the extent they might like.

Setting the price of your product across all franchises is no longer a ...

Article content. So if a franchisor were to require franchisees to sell products for a certain price, or mandate minimum levels below which the franchisee was prohibited from selling, an offence would have been made out under the Competition Act.Not just any offence, though — a “per se” criminal offence, meaning it would not even matter what the effect of the price maintenance conduct ...

Who has control over a franchise?

The franchisor usually has control over most aspects of a franchise, but when it comes to pricing the franchisor’s control is limited. The franchi sor needs to make careful decisions to avoid breaking any law. But the final say on the price always lies with the franchisee and the franchisor can only make recommendations.

Who takes complete control of a franchise?

In this case, the franchisor takes complete control of the franchise which is under a franchisee. In this case, a court looks if the franchisee believes that the franchisor has total control of his franchise.

What is unilateral pricing?

Unilateral pricing. When a franchisor refuses to sell products to a franchisee who is not willing to resell the products at a rate above the minimum MRP set by the franchisor, it can be considered as a unilateral refusal to deal. This is illegal. Minimum advertised price.

What are the antitrust laws?

The US antitrust laws, also known as the Competition laws were a major concern for the franchisors who wanted to take complete control over the franchisee pricing.

What is franchising legal claim?

This is a legal claim asserted by employees working under the franchisee but controlled by the franchisor. This is seen in cases when the franchisee and the franchisor have joint liability. Franchisor acts as an actual business. In this case, the franchisor takes complete control of the franchise which is under a franchisee.

What are the policies of a franchisor?

There are certain policies that a franchisor can opt for in an attempt to control the prices. Some of these policies are: Suggested retail pricing. Under this policy, the franchisors are allowed to suggest retail prices at which the franchisees should sell their products or services. However, these prices cannot be enforced on ...

Why is there no consistency in prices across franchises?

The fundamental to a successful franchise operation of all franchises in a uniform manner. The reputation of the brand depends on customer satisfaction from all franchises. So, there is no reason why there should be no consistency in the prices across all franchises. The brand wants all customers to get their products at the same value no matter which state they belong to. The price point is often considered as an identifier of the brand. It’s easy to understand why the franchisor wants to control the pricing at each franchise.

What is the practice of putting one franchise right next to another called?

The practice of putting one franchise right next to another is referred to as piggyback franchising.

What is franchising strategy?

A franchising strategy whereby a single franchisee owns more than one unit in a given area is typically referred to as an area developer strategy.

What is the benefit of a franchise agreement?

One of the benefits of a franchise agreement for the franchisee is that the franchisor is solely responsible for advert​ising the franchise.

What are the drawbacks of franchising?

One drawback of becoming a franchisor relates to possible new restrictions as a requirement for contract renewal.

What is Jeffrey's job?

Jeffrey's job is to identify potential business people in his country who might want to do business using a particular brand name. When the contract is signed, Jeffrey then provides training to the business person. Jeffrey is most likely:

What does McDonald's do?

McDonald's corporation helps select the location for a new restaurant and provides financial assistance, training, marketing, and products. McDonald's engages in:

What does a buyer of an existing business typically acquire?

The buyer of an existing business typically acquires its personnel, inventories, physical facilities, established banking connections, and ongoing relationships with trade suppliers.

Who wants to sell a franchise?

the franchisor wants to sell the franchise to someone else.

What are the disadvantages of franchising?

A disadvantage of franchising is. restricted sales territories. RST, Inc., a franchisor, is requiring its franchisee, Raymond, to make significant changes to the equipment and interior appearance of his business as a condition of renewing the contract.

What is the deal between Leonard and the seller?

Leonard and the seller have agreed to a price for a business. Leonard cannot pay cash for the entire purchase price so he applied for a bank loan. The bank is likely to: require the assets of the company serve as collateral for the loan. Marvin is selling his business as a total entity.

What is Jeffrey's job?

Jeffrey's job is to identify potential business people in his country who might want to do business using a particular brand name. When the contract is signed, Jeffrey then provides training to the business person. Jeffrey is most likely:

What does McDonald's do?

McDonald's corporation helps select the location for a new restaurant and provides financial assistance, training, marketing, and products. McDonald's engages in:

Is Annabell a franchisee?

a franchisor. Annabell has been granted the right to conduct business according to specified methods and terms of another party. Annabell is a: franchisee. Abner signed a contract allowing him to use Brian's business model and sell products approved by Brian. Abner is: franchisee.

Does Martin have an ABC franchise?

Martin operates an ABC franchise. Recently the franchisor has attempted to make changes to the contract that would increase Martin's costs so as to make the business unprofitable. The franchisor is engaging in:

What are the measures of franchise quality control?

The broader outlines of franchise quality control measures will come from the franchise legal documents (trademark use, training requirements, territory and product mix, approved and designated suppliers, and similar matters). It is vitally important that franchisors use legal counsel experienced in franchising to draft the Franchise Agreement and Franchise Disclosure Document to ensure the documents protect the franchisor’s best interests and reflect current best practices. For their part, franchisors need to be vigilant in enforcing the standards outlined in the legal documents. If one franchisee is allowed to circumvent the rules, others could soon follow, and quality for the whole system could be in jeopardy.

What happens if a franchisee circumvents the rules?

If one franchisee is allowed to circumvent the rules, others could soon follow, and quality for the whole system could be in jeopardy.

How do franchisors maintain their brand?

Franchisors maintain the quality of their brand by making sure their franchisees are properly trained to run the franchise and by providing ongoing support. Franchisees need to be supported at every stage of their franchise ownership experience. The type of support, of course, will vary with the brand and the franchisee. Even industry-experienced candidates need to be trained to maintain the quality standards of your brand. For most systems, the right training mix involves independent study, some classroom (including online classroom) components, and significant hands-on training. It is valuable, as well, for members of the franchisor’s team to assist with store openings and business launches. Most franchisors provide some level of ongoing field support as well, covering important topics such as finances, marketing, ongoing operations, facility maintenance, and more. All of these training and support components set the tone for the franchisor-franchisee relationship and can help make “quality control” feel not so controlling.

Why should franchisors exercise quality controls?

While franchisors need to be careful not to exercise too much control (because of agency, joint employment and other concerns), the franchisor should exercise strong quality controls over any aspect of the business that will impact the consumer’s perception of the concept or brand standards.

Is it true that a franchisee controls day to day operations?

While it is true the franchisee controls day-to-day operations, the strongest franchise systems are still able to maintain the highest levels of quality control. In fact, with strong quality controls in place, franchised locations very frequently outperform company-owned and hired manager-run locations.

Do franchises have quality control?

While it is true the franchisee controls day-to-day operations, the strongest franchise systems are still able to maintain the highest levels of quality control. In fact, with strong quality controls in place, franchised locations very frequently outperform company-owned and hired manager-run locations. While franchisors need to be careful not ...

What was Jeff Bezos' original business plan?

Jeff Bezos' original business plan involved taking orders for books and having the items shipped directly from the publisher to the customer. He modified the plan to include other products such as toys and decided to buy the toys from the producers and ship them from his own warehouse. This modification of the original plan is called:

What happens when a Fortune 500 company lays off workers?

When a Fortune 500 business lays off workers, some displaced employees may decide to start their own businesses. They are best described as

What does integrity give a company?

a. The entrepreneur with integrity gives the company a competitive edge.

Why did Walter leave the corporation?

Walter wanted to be able to make decisions about issues that directly affected his department but in his corporation, the managers made all the decisions. So Walter left the corporation and started his own firm. Walter was looking for:

Who is the owner of DEF LLC?

Clark, the owner of DEF LLC, bragged about hiding company income from the IRS but was surprised when he learned his sales manager was accepting kickbacks from customers. Clark should have remembered:

Franchise Opportunities Can Be Costly

One of the major considerations in getting a franchise is the cost. This comes in several forms. There will be the initial large cost, which can be many thousands of dollars – depending on the business. Then, you may also have royalties that need to be paid. In addition, some franchise companies will also expect a share of the profits, too.

Control Could Be a Serious Concern

How much control you will actually have over the business is another potentially major concern. Some franchise companies have very few requirements, while other ones will have many. You will need to understand what is required in advance and what your limitations are.

Early Franchise Profit May Be Limited

One more concern is that you may not be able to create the profits that you hope to see. This could be because of a combination of price control by the company and the setting of profit goals.

Which has greater buying power: franchise networks or small computer retailers?

A. franchise networks have greater buying power. A small computer retailer makes every effort to satisfy customer needs both before and after the sale. However, this retailer regards social problems as being beyond the scope of his business. This firm's management has recognized:

Why do new businesses need to manage cash flows carefully?

A new business needs to manage cash flows carefully because if a firm runs out of cash, it is out of business.

Why did Chocolate Concoctions decide to price its boxes of candies below the long-term market price?

The decision was made to increase market share and discourage other firms from entering the chocolate market. Chocolate Concoctions was implementing a

Why did Walter leave the corporation?

Walter wanted to be able to make decisions about issues that directly affected his department but in his corporation, the managers made all the decisions. SO Walter left the corp and started his own firm. Walter was looking for:

What is George's decision to outsource personnel management?

He has decided to outsource part of personnel management to an organization that handles paperwork and administers benefits for his employees in an arrangement called: A. a joint venture.

What happens if a small business slips on a wet floor?

A small business customer slips on a wet floor (due to a slow water leak), falls and breaks an arm. Damages that could potentially be awarded to the customer might include:

What is a statement of franchisors finances?

Statement of franchisors finances, experience, size and involvement in litigation. Must inform potential franchisees of any restrictions, costs and provisions for renewal, termination or sale of the franchise

What is a complete plan?

complete plan that provides in-depth analysis of the critical factors that will determine a firms success or failure, along with all the underlying assumptions.

Where does revenue come from?

revenue comes from selling one or more products to generate revenue from other products

Does Estimates the value of the firms assets reflect the value of the firm as a going concern?

Estimates the value of the firms assets , does not reflect the value of the firm as a going concern

Who has control over a franchise?

The franchisor usually has control over most aspects of a franchise, but when it comes to pricing the franchisor’s control is limited. The franchi sor needs to make careful decisions to avoid breaking any law. But the final say on the price always lies with the franchisee and the franchisor can only make recommendations.

Who takes complete control of a franchise?

In this case, the franchisor takes complete control of the franchise which is under a franchisee. In this case, a court looks if the franchisee believes that the franchisor has total control of his franchise.

What is unilateral pricing?

Unilateral pricing. When a franchisor refuses to sell products to a franchisee who is not willing to resell the products at a rate above the minimum MRP set by the franchisor, it can be considered as a unilateral refusal to deal. This is illegal. Minimum advertised price.

What are the antitrust laws?

The US antitrust laws, also known as the Competition laws were a major concern for the franchisors who wanted to take complete control over the franchisee pricing.

What is franchising legal claim?

This is a legal claim asserted by employees working under the franchisee but controlled by the franchisor. This is seen in cases when the franchisee and the franchisor have joint liability. Franchisor acts as an actual business. In this case, the franchisor takes complete control of the franchise which is under a franchisee.

What are the policies of a franchisor?

There are certain policies that a franchisor can opt for in an attempt to control the prices. Some of these policies are: Suggested retail pricing. Under this policy, the franchisors are allowed to suggest retail prices at which the franchisees should sell their products or services. However, these prices cannot be enforced on ...

Why is there no consistency in prices across franchises?

The fundamental to a successful franchise operation of all franchises in a uniform manner. The reputation of the brand depends on customer satisfaction from all franchises. So, there is no reason why there should be no consistency in the prices across all franchises. The brand wants all customers to get their products at the same value no matter which state they belong to. The price point is often considered as an identifier of the brand. It’s easy to understand why the franchisor wants to control the pricing at each franchise.

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