Now listen to part of a lecture on this topic in a business management class.
(male professor) OK, so we've been talking about starting a business. Let's say I want to open up a pizza restaurant. Well, I know how tough it is to make a new business succeed. And I want a sure thing, so I contact the big company that owns a chain of pizza places. Let's say it's called, “Pizza Town.” And I pay for the rights to call my restaurant Pizza Town and to sell Pizza Town's special, one of a kind, pizza.Now, since everyone has heard of Pizza Town, it's really popular, I don't have to worry about whether people would want to eat my pizza or not, I already know this pizza will sell well because it's a known thing. And that means there's a better chance my business will succeed.Now, in exchange for being able to call my restaurant Pizza Town, I have to agree to run the business the Pizza Town way. And Pizza Town trains me to do this. They show me how to do everything, how to make my pizzas taste like Pizza Town pizzas, how to advertise, even how to make my store look like a Pizza Town. Now, this means that I don’t have a lot of freedom or choice in the way I run my business. But in a lot of ways, this is great for me. After all, Pizza Town’s way generally works. They sell a lot of pizza.
Using the example given by the professor, explain how franchising works.
Franchising is a business practice in which someone pays an established company to buy the right to use the company's name and sell its product. For example, the professor wants to open a pizza restaurant, so he pays some money to an established company called Pizza Town for the right to run a Pizza Town restaurant. Since Pizza Town is already very famous and popular, the professor doesn't have to worry whether there will be customers. So he'll have a better chance of success. And also, his restaurant has to follow all the standardized practice of Pizza Town restaurant, like the decoration of the restaurant and the ad, and his staffs have to be trained by the company to produce the very same Pizza Town pizza. Therefore, even though he doesn't have much freedom, the professor can still make the business succeed through the practice of franchising. (127 words)
