Paper 2 · November 2019 · franchising
A franchisee faces a lower risk of failure than someone starting an independent business mainly because
Athe franchisor guarantees a minimum profit
Bcompetition law bars rivals from the town
Cno capital at all is needed to open the outlet
Dthe brand and the product have already been proven
Explanation
The franchisee begins trading with a name customers recognise and a product that has already sold elsewhere, so demand does not have to be created from nothing. Training and central advertising reduce the risk further.
Derived from ZIMSEC Business Enterprise Skills Paper 2, Nov 2019, Q1