Franchise Business Model: Understanding the Basics

What are some key characteristics of the franchise business model?

a) Franchisees enjoy limited liability protection.

b) Franchisees have significant independence.

c) Franchisors control branding and operations.

d) Franchise agreements are typically short-term.

Answer:

Franchises provide limited liability protection and franchisors control branding and operations.

Franchising is a popular business model where individuals buy the rights to operate a business under a franchisor's established brand and system. Here are some key characteristics of the franchise business model:

Franchisees enjoy limited liability protection: This means that the personal assets of franchisees are protected from business liabilities. In case of legal issues or debts, the franchisee's personal assets are not at risk.

Franchisors control branding and operations: The franchisor holds control over the brand image, marketing strategies, and day-to-day operations of the franchise network. This ensures consistency and quality across all franchise locations.