Different types of organisation have different advantages and disadvantages. These must be considered when owners decide on which form their organisation should take.
An entrepreneur can opt to set up a new independent business and try to win customers. An alternative is to buy into an existing business and acquire the right to use an existing business idea. This is called franchising.
A franchise is a joint venture between:
A franchisee, who buys the right from a franchisor to copy a business format.
And a franchisor, who sells the right to use a business idea in a particular location.
Many well-known high street opticians and fast food restaurants are franchises.
Opening a franchise is usually less risky than setting up as an independent retailer. The franchisee is adopting a proven business model and selling a well-known product in a new local branch.
