Franchises, joint ventures and social enterprises Edexcel International GCSE Business revision
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In plain words
Not every business starts from nothing. You can buy the right to trade under a famous name: that is a franchise. Two firms can team up for one project: a joint venture. And some businesses exist mainly to do good: social enterprises.
Each is a different answer to the question of who takes the risk and who gets the reward.
6 things to know
- In a franchise, the franchisor lets a franchisee use its brand name, products and methods, in return for a fee and a share of the sales.
- For the franchisee: a known brand, training and national advertising lower the risk. But fees must be paid, and the franchisor's rules must be followed.
- For the franchisor: the business expands quickly using other people's money. But one poor franchisee can damage the whole brand's reputation.
- A joint venture is when two or more businesses agree to work together on a project, sharing the costs, the risks and the profits. It is often used to enter a market abroad with a local partner.
- A social enterprise has social or environmental objectives as well as profit, and puts its profit back into those aims.
- A public corporation is a business owned and controlled by the government.
Tips and tricks
- Franchisor and franchisee are easy to swap. The franchisor is the original business that owns the brand. The franchisee pays to use it.
- A social enterprise still needs to make a profit to survive. What differs is what the profit is used for.
It lands in your notebook with its questions as flashcards.
Franchises, joint ventures and social enterprises: 5 questions and answers
These are the quiz’s questions. Do the quiz first, then come back here for the ones that got you.
In a franchise, who owns the brand name?
The franchisor licenses its brand to franchisees.
Which is an advantage to a franchisee?
A known name brings customers and lowers the risk.
Which is a disadvantage to a franchisor?
Customers blame the brand, not the individual outlet.
Two companies agree to share the cost and profit of building a new factory. This is
They work together on one project.
What makes a social enterprise different from most businesses?
Profit is a means to its social or environmental aims.
Quiz
5 questions
Tap an answer and you’ll see straight away whether it’s right, and why.
Worksheet
3 questions, 8 marks. Write your answers on paper, then check them.
Franchises, joint ventures and social enterprises
Edexcel International GCSE Business 4BS1 · 8 marks · papermunch.org
Name ______________________________ Date ______________
Define a franchise.[2]
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An agreement in which one business (the franchisor) allows another (the franchisee) to trade using its brand name, products and methods, in return for a fee.
Explain two advantages to a person of opening a franchise, compared with starting an independent business.[3]
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The brand is already known, so customers come from the first day and the risk of failure is lower. The franchisor provides training, advice and advertising.
Explain why a business might use a joint venture to start selling in another country.[3]
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A local partner knows the customers, the laws and the culture, which reduces the risk of mistakes. The costs and risks of the project are shared between the two businesses.
Answers: Franchises, joint ventures and social enterprises
- 1. An agreement in which one business (the franchisor) allows another (the franchisee) to trade using its brand name, products and methods, in return for a fee.
- 2. The brand is already known, so customers come from the first day and the risk of failure is lower. The franchisor provides training, advice and advertising.
- 3. A local partner knows the customers, the laws and the culture, which reduces the risk of mistakes. The costs and risks of the project are shared between the two businesses.