QUESTION TWO [25]

For the franchisor, the franchise is an alternative to building "chain stores" to distribute goods that avoids the investments and liability of a chain. The franchisor's success depends on the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because they have a direct stake in the business. Comprehensively discuss the above statement by making reference to the advantages and disadvantages of the franchisee and the franchisor.