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Franchise (licensing)
- Granting or licensing of the right to use systems, expertise,brandsknow how etc. to another organisation, generally in return for a profit share or sales royalty for example authorisation to sell a company's services or goods in a particular geographical place.One of the most famous illustrations is McDonalds with more franchised restaurants than any other franchise network.
- Rapid market expansion for franchisor.
- Expansion generally financed at least in part by the franchisee.
- Entrepreneurial spirit of franchisee for example better than perhaps a bureaucracy of using internal staff to expand organisation instead.
- Economies of scale achieved for instance management and overhead spread over more and more franchises as the organisation grows in size.
- Long-term loss of profit for franchisor
- Control over franchiser reputation can be costly to support
Controlling is an essential management function as efficient control mechanisms ensure that the performance of the company increases over time through the incorporation of feedback
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