Define the term 'franchise'.

Mark scheme

Marking points from the official mark scheme (May/June 2022). The mark or mark type is shown in brackets.

1. [2] A franchise is a business that uses the name/logo of an existing business
2. [2] A legal contract between two businesses for one business to operate as a franchise
3. [2] The process of a franchisor selling the rights of its business to a franchisee
4. [1] Example of a franchise, e.g. McDonald's, KFC
5. The business can benefit from the reputation of the franchise giving a higher chance of success
6. Marketing/advertising costs may be spread between all franchisees and have national/wider coverage
7. Help and advice from the franchisor can be useful to a business new to the franchise (industry) or new to business ownership of any type
8. Increased chance of success because the product/service is established (known by customers)
9. Competition might be limited due to the franchisor restricting the setting up of another outlet in the same area
10. Opportunity for the franchisee to expand their business
11. Relations with suppliers already established