Analyse the advantages to an entrepreneur of purchasing a franchise to start a business.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

1. Level 4: Good analysis of the advantages to an entrepreneur of purchasing a franchise to start a business. [7-8]
2. Level 3: Some analysis of the advantages to an entrepreneur of purchasing a franchise to start a business. [5-6]
3. Level 2: Some application of the advantages to an entrepreneur of purchasing a franchise to start a business. [3-4]
4. Level 1: Knowledge and understanding of a franchise/entrepreneur. [1-2]
5. Level 0: No creditable content. [0]
6. Answers may include:
7. Knowledge and Understanding
8. Clear understanding of a franchise.
9. Clear understanding of an entrepreneur.
10. Application
11. Reference to the advantages to an entrepreneur of purchasing a franchise or starting a business.
12. Analysis
13. Lower risk of a new business failing – as an established brand and product is used.
14. The franchisor normally provides training and business advice.
15. Access to national/international marketing may be available.
16. Supplies are normally acquired from quality-checked suppliers.
17. Sales area is usually ring-fenced, providing some degree of monopoly power.
18. These advantages need to be paid for and often incur considerable costs.
19. Accept any other valid response.
20. Level 4: Effective evaluation of factors that could lead to the failure in the context of a small business which repairs cars. [9-12]
21. Level 3: Limited evaluation of factors that could lead to the failure in the context of a small business which repairs cars. [7-8]
22. Level 2: Application and analysis of factors that could lead to the failure of a small business. [3-6]
23. Level 1: Knowledge and understanding of a small business. [1-2]
24. Level 0: No creditable content. [0]
25. Answers could include:
26. Knowledge and understanding
27. Understanding of issues that relate to a small business.
28. Application
29. Reference to the factors that might explain why small businesses fail.
30. Analysis
31. May run into cash flow problems as customer payments not made/or slow.
32. Quality of work may reduce if the business becomes too busy or a skilled member of staff leaves or has an accident – so customers leave.
33. The business may grow too quickly resulting in pressure on cash flow.
34. Poor management of the business.
35. Fewer opportunities for economies of scale in a small business.
36. Reference to the particular issues that face small car repairers.
37. Issues such as the capital requirement for machines and tools/equipment to repair cars.
38. Issues such as the requirement for skilled mechanics and appropriate premises.
39. Suppliers may increase costs of car parts/oil/tyres.
40. Larger and more efficient car repair businesses may trade away from a small business – with special offers/more up-to-date machinery.
41. May lose an important contract to repair cars for other businesses (such as a contract to repair the cars of a taxi business).
42. Evaluation
43. The context is a small business which repairs cars.
44. Evaluation might discuss the factors that could lead to failure and make a judgement as to which are the most significant.
45. A distinction might be made to internal and external factors that could lead to failure.
46. Accept any other valid response.