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Student's Book  Form Five


               Exercise 2.2                          specified guidelines. It is important for
                                                     anyone planning to start a business by
            1. Mr. EGM completed Form IV             becoming a franchisee to remember that
              in 2004. Since then, he has been       in franchising, the franchisee is bound
              employed in his brother’s restaurant   to an agreement with the franchisor for
              as a manager. Now, he would like       a defined period. Franchising is meant to
        FOR ONLINE READING ONLY
              to establish a company that will       spread business in areas where the original
              supply home appliances. However,       owner is unable to reach. Some examples
              he is not well informed on the         of the franchises found in Tanzania include;
              basic requirements for company         Kentucky Fried Chicken (KFC), and
              formation. How can you help him?       Subway which are American fast-food

            2. As a knowledgeable person in          chains that are operating in Tanzania.
              company management, how would
              you articulate the mechanisms          Advantages of franchise
              through which shareholders             The following are the advantages of the
              influence  decision-making             franchise:
              processes within a company?            Business operations assistance: Depending
            3. Suppose you are a worker of a         on the terms of the franchise agreement and
              particular company:                    the structure of the business, the franchisee
              (a) How will you perceive the          might receive significant assistance in
                  key responsibilities of the        business operations. The assistance may be
                  board of directors in corporate    in form of equipment, supplies, marketing
                  governance?                        support or plans to operate the business.
              (b) How will you contribute to ensure   Profit:  In  general,  franchises  receive
                  accountability, transparency, and   higher profits than independently
                  strategic direction within the     established businesses. Most franchises
                  company?                           have recognizable brands that bring

                                                     customers from different countries. This
                                                     popularity results in higher profits.
          Franchise                                  Customer base: Franchises have access

          A franchise is a business in which the owner   to instant brand recognition and a loyal
          of a business system (the franchisor) grants   customer base. Even if the branch of a
          an individual or group (the franchisee) the   franchise is opened in a small town, the
          right to run a business using the franchisor’s   likelihood is that potential customers
          business system for a fee and/or some share   are already familiar with the brand from
          of income generated. Franchisees are also   exposure to commercials or travel to other
          permitted to use the franchisor’s branding,   cities.
          trademarks, and identification marks under



                                                  25        Business Studies for Advanced Secondary Schools



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