Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 1 BUSINESS ORGANIZATION FRANCHISE; COOPERATIVES; MULTINATIONALS 5/2/2023 Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 5/2/2023 2 1.4 FRANCHISE • A Franchise is an enterprise that has a license from a Franchisor to sell its products or services Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 3 WHAT IS A FRANCHISE? 5/2/2023 Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 4 FRANCHISOR V/S FRANCHISEE 5/2/2023 EXAMPLE OF FRANCHISE: MCDONALD’S Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 5/2/2023 5 • For example, many McDonald’s restaurants are franchises, meaning an owner (or group of owners, in some cases) pays McDonald’s to use their brand name, menus, logos, and other business assets. • They run their location, pay McDonald’s to use the name, and keep the remaining profits. Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 5/2/2023 6 EXAMPLES OF FRANCHISE In the Clothing and Fashion Buisness In the Food Retailing Business 1.4.1 HOW TO SET UP A FRANCHISE Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 5/2/2023 7 In a franchise business, a franchise owner pays a fee to essentially “rent” a brand name. Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 5/2/2023 8 FRANCHISE AGREEMENT • There are two main parties involved in a Franchise Agreement – The Franchisor (the business owner) and The Franchisee (who acquires a license from the business owner). • A typical Franchise Agreement will include: a franchise disclosure document; territory limits; fees & purchases; timeline & renewal; advertising & marketing; sourcing & design; confidential data. Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations FEATURES OF A FRANCHISE 9 5/2/2023 Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 10 OWNERSHIP AND CONTROL 5/2/2023 ADVANTAGE AND DISADVANTAGE OF FRANCHISE 11 Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations Advantages Disadvantages Strong Reputation- Huge Investment Fewer chances of new The franchise license fee business failure as an can be expensive established brand Support and Training Advise; management support and training offered Control by Franchisor Strict rules on pricing; layout to follow (it decreases owner’s control over business Existing product Profits to Franchisor Most supplies purchased Part of the Profits to be directly from franchisor paid to the franchisor 5/2/2023 Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 12 1.3 COOPERATIVES 5/2/2023 Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 13 DEFINITION OF COOPERATIVE • A Cooperative is a business organization which is owned and run jointly by its members, who share the profits or benefits 5/2/2023 Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 5/2/2023 14 FEATURES OF COOPERATIVES FEATURES OF A COOPERATIVE Registration It is registered at the Cooperatives Division Ownership Owners are known as members. Shares are issued to members to raise capital Control Each member has one voting right to participate in the decision making Risk Members have limited Liability Profit The gains are termed as surplus. Members share it among themselves as dividend. Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 5/2/2023 15 1.3.1 HOW TO SET UP A COOPERATIVE Application to the Cooperatives Division Registration Certificate of Registration ADVANTAGES AND DISADVANTAGES OF A COOPERATIVE Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 16 Advantages of a cooperative Employment Members create their own jobs and provide employment to others Ownership and Control Members share ideas and help in the management of the cooperative Profits The gains (surplus) are shared among members as dividends Government Grants, Subsidies, loans and other financial Support and non financial assistance given as support Disadvantages of a cooperative Consultation Slow decision making (all members need to be consulted Low Profits Prices are usually low (low profit) 5/2/2023 Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 5/2/2023 17 MULTINATIONALS Multinational Company (MNC) is an enterprise that has production or service facilities outside the country in which it is based. Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 5/2/2023 18 FEATURES OF MULTINATIONAL COMPANY Headquarter (Parent Company in USA for example) Country A Country B Country C Country D Headquarter is the Country of Origin MNCs manufacture products with same features, logo or product names in different parts of the world. Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations ADVANTAGES AND DISADVANTAGES OF MNC 19 5/2/2023 Notes Prepared By Mrs Ranjeeta Awotar - Grade 9 BEE - Unit 1 on Business Organisations 5/2/2023 20 1.5 SELECTING THE RIGHT BUSINESS ORGANIZATION FOR MY ENTERPRISE Factors to Consider Decisions are influenced by: Ownership and Control Who will Own and Control? Will I have Control (Will it be shared)? Continuity Risks What are the Risk owner is willing to take? What are the formalities involved in setting up? Who will be responsible when I am absent? Some enjoy to take risk others unwilling to do so Some want to raise more capital to grow their enterprise Registration and Procedures Expansion Some discouraged due to complicated registration process and expensive fees
