Advantages and Disadvantages of Franchising
Advantages and disadvantages of franchising, and advice I would give to an entrepreneur who is evaluating a franchise opportunity
The advantages for the franchisee
The franchisor franchisee relationship is symbiotic-each party provides the other something beneficial it would not have been able to provide for itself. Both gain so both must contribute. The franchisor’s best interest is having each of its outlets succeed, and because of this, the franchising firm provides a number of advantages to its franchisees
Start-up assistance
The franchisor will provide services intended to make the task of getting started easier. Advice is given on site selection, facilities layout analysis, financial assistance (sometimes directly, but usually indirectly by making it easier to get other sources of capital due to the presence of the franchisor), management training, employee selection, and training assistance
Basis for judging prospect of success
The franchising option provides a ready-made basis for assessing the possibilities of making money. When a new business starts, the profitability potential is uncertain, but with a franchise making a projection of profit is easier, as a franchise in one area will probably do about as well as in another area. You can compare the area you want to open your franchise to a similar area with a similar franchise.
Instant Recognition
Well established franchise chains bring with them the important advantage of recognition. Many new businesses have lean months or years after starting, but with the right franchise this period of agony may only last weeks, or days.
Purchasing Power
Being part of a large organisation means paying less for a variety of things like supplies, equipment, inventory, services, and insurance. It can also mean getting better service from suppliers because of the importance of the national account of which you are a part.
Advertising scope and sophistication
Franchise companies are often national in scope, and
The advantages for the franchisee
The franchisor franchisee relationship is symbiotic-each party provides the other something beneficial it would not have been able to provide for itself. Both gain so both must contribute. The franchisor’s best interest is having each of its outlets succeed, and because of this, the franchising firm provides a number of advantages to its franchisees
Start-up assistance
The franchisor will provide services intended to make the task of getting started easier. Advice is given on site selection, facilities layout analysis, financial assistance (sometimes directly, but usually indirectly by making it easier to get other sources of capital due to the presence of the franchisor), management training, employee selection, and training assistance
Basis for judging prospect of success
The franchising option provides a ready-made basis for assessing the possibilities of making money. When a new business starts, the profitability potential is uncertain, but with a franchise making a projection of profit is easier, as a franchise in one area will probably do about as well as in another area. You can compare the area you want to open your franchise to a similar area with a similar franchise.
Instant Recognition
Well established franchise chains bring with them the important advantage of recognition. Many new businesses have lean months or years after starting, but with the right franchise this period of agony may only last weeks, or days.
Purchasing Power
Being part of a large organisation means paying less for a variety of things like supplies, equipment, inventory, services, and insurance. It can also mean getting better service from suppliers because of the importance of the national account of which you are a part.
Advertising scope and sophistication
Franchise companies are often national in scope, and