Advantages of joint ventures Disadvantages of joint ventures Sharing of costs - very important for If the new project is successful, then the profits have to expensive projects such as new aircraft _| be shared with the joint venture partner. Local knowledge when joint venture Disagreements over important decisions might occur company is already based in the country Risks are shared. ‘The two joint venture partners might have different ways cof running a business ~ different cultures To the franchisor To the franchisee ‘Advantages | @ The franchisee buys a © The chances of business failure are much licence from the franchisor | _reduced because a well-known product is. to use the brand name. being sold. ‘© Expansion of the © The franchisor pays for advertising. franchised business is © All supplies are obtained from a central source much faster than if the = the franchisor. franchisor had to finance | @ There are fewer decisions to make than with all new outlets an independent business ~ prices, sto re layout © The management of the and range of products will have been decided ‘outlets is the responsibility | by the franchisor. of the franchisee. © Training for staff and management is provided © All products sold must by the franchisor. be obtained from the ‘© Banks are often willing to lend to franchisees franchisor. due to relatively low risk, Disadvantages | @ Poor management of one | @ Less independence than with operating a non- franchised outlet could franchised business. lead toa bad reputation | @ May be unable to make decisions that would for the whole business. suit the local area ~ e.g. new products that are @ The franchisee keeps rot part of the range offered by the franchisor. Profits from the outlet. | @ Licence fee must be paid to the franchisor and possibly a percentage of the annual turnover.