The franchisor giving certain rights to the franchisee within a certain period of time

A business method that involves the licensing of trademarks and methods of doing business

Usually chain stores

Franchisor:› Plan location and decoration of the

franchisee’s shop› Provide training› Give continuous guidance and assistance

to franchisee Franchisee:

› Pay entrance fees› Pay certain percentage of sales revenue as

franchisee fees

7-Eleven Starbucks KFC Burger King Pizza Hut GONG CHA Happy Lemon

Entrance Fee : 450,000 – 550,000› Include a returnable stock deposit of 200,000

Operating period given: 5 years Venue: Franchisee can select from the

existing 7-11stores, except the newly opened stores

Rent: pay by franchisor Franchisee need to attend a

60-days training course (for free)

Entrance Fee : › Returnable stock deposit : $30,000› Purchase of Equipment : $120,000 ~ $130,000› Decoration Fee : $150,000 ~ $200,000› FEHD License Fee : $20,000› Stock Purchase : $120,000 ~ 150,000

Operating period given: 3 years› From the 4th year, contract need to be renewed

per 2 years for $40,000

Consultant› Consultancy fee : $2,000 each time› Commissioner need to come at least 1 time/month

during the first six months

Franchise to one company ONLY› Starbucks Maxim’s› KFC (HK) Birdland (Hong Kong) Limited› Burger King SSPHK (Airport and The Peak)› NAS Holdings (Others)› Pizza Hut Jardines Group

This kind of franchisees can franchise to

others

Expand regionally, nationally and internationally

No need to take care of daily operations of the branches

Can concentrate on the development of the whole business

Franchisee can find out new areas of business

Earn the entrance fees and regular franchisee fees

Block the chance of loss

No need to spend long period of time to build the company’s reputation

Burden is less than independently setting up a new business

Obtains support from the head office Can learn the way to run a business Ensure there is not other competing

franchise business around

Franchisee can become a competitor Franchisee may hurt the reputation of

the head office

Have to follow the requirements of the franchisor

Lack of self determination or scope of creativity

The franchisee cannot take all the profits

Have to pay a certain percentage of sales revenue as franchise fees

Textbook Wikipedia (English / Simple English)

› en.wikipedia.org / simple.wikipedia.org

7-11› http://www.7-eleven.com.hk

GONG CHA› http://www.gong-cha.com

Online Forum› http://forum.online.hk/viewthread.php?

tid=966&extra=page%3D1&ordertype=1