Comprehension

1. Why is franchising so advantageous for beginners?

2. What does a franchisee buy in a franchise?

3. What advantages does franchising give a franchiser?

4. What are potential risks involved in buying a franchise?

5. In what industries is franchising most popular?

6. Why is cross-border franchising growing so rapidly nowadays?

Exercises:

Ex. 1. Complete the passage below using the appropriate words or phrases from the box.

franchiser management services fee franchise agreement advertising fee franchisee format operations manual master franchisee franchise fee

Franchising can be defined as a business system in which a company (or (1)_______) sells an individual (or (2)_______) the right to operate a business using the franchiser’s established system or (3)_______. The franchisee is thus able to take advantage of the franchiser’s brand names, reputation and experience.

As part of the contract (or (4)_______) the franchisee pays an initial sum of money, known as a (5)_______ to the franchiser and, in addition, agrees to pay (6)_______ in exchange for continuing advice and assistance which is usually calculated as a percentage of annual turnover. In certain cases the franchisee may also pay an (7)_______ to contribute to the franchiser’s annual advertising and marketing costs. It is important to understand that the franchisee also has to find the necessary capital to open the business.

Once the contract has been agreed, the franchiser provides an (8)_______ which is a document containing all the information that the franchisee requires in order to manage his or her business. In some cases a franchiser may appoint a (9)_______ to supervise all aspects of the development of the business inside a territory.

Ex. 2. Read the following statements and decide which refer to franchisers (F’R) and which to franchisees (F’E).

	F’R	F’E
1. They can easily get advice on how to deal with specific problems.
2. They do not have to borrow large amounts of capital to expand.
3. They must respect certain rules.
4. They may have to buy supplies from one source.
5. They are responsible for national advertising.
6. They can only sell certain products.
7. They may not be able to sell the business easily.
8. They provide regular reports on the level of sales.
9. They can develop their business without having to deal with problems of recruiting and managing personnel.

Ex. 3. Read the text. Fill in the blanks with the words chosen from those in the box below.

operating price parent competitors investor fee corporations franchising