Definition of Franchising, Advantages and Disadvantages

 Topics,

Definition of Franchising,

Advantages of choosing a franchise,

Disadvantages of buying a franchise.

Franchising

(Click here to see this article)

Eсоmmerсe business mоdels оr Сlаssifiсаtiоns

Franchising

Franchising is a relatively easy way for an entrepreneur to set up without excessively large start-up costs. It is also a way for it money without being to operate every location where his go services are available.

Definition of Franchising

Franchising is a form of business organization hic a firm which already exists has a successful product or service (the franchiso) who enters into a continuing contractual relationship with other businesses (franchisees) operating under the franchisor's trade name and usually with the ranchisor's guidance in exchange for a fee. For example, when you get your local McDonald's, Subway Dunkin Donuts, or nearly any hotel Atle Nted States, you are most likely at a franchise location.

Franchising Relationships

A franchise is an agreement between two business partners, the franchisee and the franchisor. The franchisee is the entrepreneur that is going to buy the franchise from the large company, also known as the franchisor. When a franchisee buys a franshiseiry are essentially paying the franchisor for their name, general busan, and help in starting and operating the business. 

The relationship between the franchisee and franchisor is extremely important.Obviously, the franchisee needs the support and assistance of the franchisar to succeed, and the franchisor will be paid a percentage of the franchisees sales, so the franchisor wants to help the franchisee succeed But, the franchisor must also protect their most valuable assets. 

An entrepreneur running their ovon business has free regn operational decision. They can market how they want to sell at the print they want to develop the products they want to, and really, make their own rules. Because a franchisor needs to maintain a consistent reputation throughout the market and among number of different franchisees, part of buying a franchise is agreeing to her of conditions set by the franchisor.

Advantages of choosing a franchise

• In addition to a well-known brand name, buying franghise offers many other advantages that aren't available to the enterpreneur starting a business from scratch. Perhaps the most significant is chato get a proven system of operation and training in how to use it. New franchisees can avoid a lot of the mistakes startup entrepreneurs trolly hake because the franchisor has already perfected daily operationsthrough trial and error.

• Reputable franchisors conduct mall research before selling a new outlet so you'll feel greater confided at there's a demand for the product of service. The franchisor a clear picture of the competition and how Perentiate yourself from them. 

• Finally, franchisees enjoy the benefit of strength in numbers. You'll gain from economics Or scale in buying materials, supplies and services, such as advertising as well as in  negotiatingfor locations and lease terms. By  comparison independent operetors have to negotiate on their own, usually gettings less favorables terms. Some suppliers won't deal with new businesses or will reject your business because your account isn't big enough. 

• Franchises offer the independence of small business ownership supported by the benefits of a big business network.

• You don't necessarily need business experience to run a franchise Franchisors usually provide the training you need to operate their buses model.

• Franchises have a higher rate of success than start-up businesses .

• You may find it easier to secure finance for a franchise It may cost less to buy a franchise than start your own business of the same type.

• Franchises often have an established reputation and image, proven management and work practices, access to national advertising ang ongoing support.

Disadvantages of buying a franchise

• There are usually restrictions on where you operate, the products you se and the suppliers you sell.

• Buying a franchise means entering into a formal agreement with your franchisor.

• Franchise agreements dictate how you run the business, so here may be little room for creativity

• Bad performances by other franchisees may effect your franchise's reputation.

• Buying a franchise means ongoing shaping of profit with the franchisor.

•  Franchisors do not have to renew an agreement at the end of the franchise term. 

Franchising is seen by many as simple way to go into business for the first time. But franchising is no guarantee of success and the same principles of good management such informed decision-making, hard work, time management, having enoudh money and serving your customers well -still apply. 

(Click here to see this article)

Business Process Outsourcing (BPO)