
Nandos shop. Image credit lovealdershot.co.uk
ZIMSEC O Level Commerce Notes: Retail Trade: Franchising
Franchising
- A franchise is an agreement in which a retailer (franchiser) gives the right to another trader (franchisee) to use the name of the business and to sell the franchiser’s products in a given geographical area e.g. Chicken Inn
Advantages of Franchising
The franchisee can:
- enjoy freedom and profit of the business
- have high chances of success since the business (franchiser) is well known or advertised well
- enjoy legal protection from the franchiser
- no need to build his own reputation
- receive cheap supplies and training of staff from the franchiser
- save on foreign currency needed to import goods and services as this is often done by the franchiser
- be assisted by the franchiser in:
- -raising capital for the business
- -keeping accounting records
- -choosing the location of the business
- -advertising products and services
- -developing the product
Disadvantages of a franchise
- The franchisee has to pay the franchiser a share of his profit based on the franchisee’s sales
- High initial charges by the franchiser may be expensive to the franchisee
- Franchisee has little freedom to determine management procedures
- Franchisee has to comply with rules and procedures of franchiser
To access more topics go the Commerce Notes page.
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