Franchise: GCSE Business Definition

What is a franchise?

In GCSE Business, a franchise is an arrangement where an individual (franchisee) buys the rights to operate a business model, sell its products and use its branding. The franchisee receives support from a larger company (franchisor) in exchange for an initial lump sum plus ongoing fees.

A franchise is not a form of business ownership; it is an alternative to starting up a brand new business from scratch. The franchisee establishes a private limited company and then operates the business using the franchisors’ systems and receives training, marketing support, and ongoing assistance. For the franchisor, franchising is a quick way to grow the business. For the franchisee, operating under a well-known brand name is more likely to lead to success than starting up a business from scratch. Franchises are particularly common in the fast food industry, with well-known brands such as McDonalds, Subway and Dunkin Donuts expanding their businesses through franchising.

Franchise Revision Resources to Ace Your Exams

Save My Exams has a great range of resources to explore the topic of franchises further. 

Find out about franchises in our GCSE Business franchise revision notes or test your knowledge of business ownership, including franchises, with our exam questions to improve your grades.

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