The advent of franchising, however, brought a big change in business. Many have since become rich because of franchising. Franchising has indeed many advantages.
You Own the Business – A franchise is a duplicate of a successful business concept. The franchisee is allowed the use of the company’s trademark and brand name. Continuous Support from Franchiser – Although running his own business, the franchisee can tap the services of the parent company anytime he needs assistance.
Most franchises being offered nowadays are turnkey operations. Upon the signing of the franchise agreement and payment of the franchise fee, the franchisee receives the equipment and supplies required in running the business. Furthermore, the franchiser provides assistance in identifying a good business location for the new outlet.
The company assists the franchisee in negotiating his lease, preparing plans for outlet layout, shop fitting, and furnishing his store. This kind of support and the other benefits under the franchise agreement is what sets franchising apart.
Training – The franchisee is given the necessary training to start his business and eventually run it smoothly. The franchisee as well as his employees are taught all the business systems of the company covering product preparation, quality standards, business controls, recruitment of personnel, and marketing. A good franchiser will provide training to the franchise staff on a continuous basis.
Lower Capital Requirement – Compared to a non-franchise business, less capital is needed in a franchised business since the experience and tested system of operations of the parent company would already have eliminated the unnecessary expense incurred through trial and error.
Buying wholesale for the whole network means big savings for the individual franchises. Extensive Promotional Campaigns – A franchise is the beneficiary of an extensive marketing campaign made possible by the sharing of the costs by the franchises.
Many franchisees are required to shell out an advertisement royalty to the company as their share in the cost of promotional campaigns of the company, effectively spreading the cost among all the franchises. This stiff competition necessitates continuous research and development programs for the company and the franchise network to succeed.
Acquiring the Status of the Company – As a franchise network expands, its stature in business becomes bigger. Minimized Business Risks – Because the franchisee is buying a proven business concept, the business risks involved are largely minimized.
Benefits for the Franchiser – Franchising is a business concept that benefits the two parties involved. Franchising a business can be like hitting two birds by the same stone: a franchise is being paid to expand it. At present, franchising is the only business concept that can make that possible. Franchised businesses grow rapidly, sometimes having several outlets in a certain area, pushing the competition out. All these benefits for the franchiser are, in turn, advantageous to the franchisees since the franchises are largely dependent on the success and stature of the parent company.

By Matthew J Anderson

This entry was posted on Thursday, July 15th, 2010 at 8:09 am and is filed under Franchise. You can follow any responses to this entry through the RSS 2.0 feed.