Franchising is more about the franchisor’s brand name as well as brand value. It is mostly about the thing like how the franchisee incurs and faces its obligations as well as about the thing that how the franchisee is operated and managed by the franchisor.
Advantages of franchising-
The five advantages of franchising are listed below-
- The risk factor is low- Franchises are more secure to invest in. it is better to invest in franchising than a new business. This is because franchising provides the support and backing of larger and established corporations. The corporations have business models, which have been tested. These business models have already proved their effectiveness in different markets of the country. There is a history about the success of the franchise that you can get across. So it is recommendable to invest in a franchise. If you don’t have enough money to buy, you can go for getting a franchise business loan. The franchise business loan is easier to get. The banks will give the loan easily because it is a known fact that the investment in a franchise is safe and secure.
- No experience- You can buy and invest in a franchise without experience. By buying a franchise, you can work in that field without any experience. Franchisors provide training and much support to the franchisees to educate them about the franchise. It will help them understand everything about the business models that they have and brief about the franchise. By entering into a recognized brand by investing in it, you will get the privilege to get the knowledge, experience and secrets, tips, and techniques that you would have learnt in your career by the process of trial and error. By owning a franchise, you can get information about the net worth of previous owners and leaders so that you can act accordingly for success.
- Brand recognition and customer base- When you decide to start a new business, you need to put a lot of effort into bringing customers and attract them to your business. But when the customers already recognize your brand, then the game becomes more interesting. By investing in a recognized franchise, you can get an easier platform. When you buy a franchise, you get into a lot of tasks, which are related to marketing and branding. By investing in a franchise business, you get access to a recognized brand with a huge customer base.
- Extensive franchisor support- All the franchisors provide the most support to their franchisees. It’s okay if you are new to this field and starting up to it newly. As the franchisors provide all the needed support to you, so you can learn things easily. Franchisors assist with the operations like site selection, construction, design, financing, and training. Some franchisors even given loans and all terms of assistance as well as financial assistance to the franchises.
- Collective buying power- When you invest in a franchise, you will become part of the franchise system. After investing, you will get the needed support from the franchisors. You will get into the recognized and known brand, which has its deep root in the market. The franchise has a good relationship with the suppliers due to the long relationship. This will make the materials less costly because of the collective buying power of the franchisors.
Disadvantages of franchising business-
There are also some disadvantages of franchising business. Those disadvantages are listed below-
- High initial investment- Any individual can invest in any company. The minimal cost for investment may differ from franchise to franchise and your choice. Some of the franchises are easily adjusted for any cost of the budget. Some of the franchises which are well known and recognized need more amount of money for investment. The cost highly depends upon the brand value it has.
- Lack of privacy- If a new franchise is there, it depends on its parent company. The new franchise needs to disclose all the information with financial information to the franchisor. The business model connects all the new franchises and parent companies internally. So there is a lack of privacy of information in this process.
- Less profit- It is not that the franchises earn less profit. Franchises earn a good sum of profit, but when it is divided among, the profit which comes to your hand is less. It happens because when you are the only owner of a company, you get all the profit alone, but when you invest in a franchise, your profit is shared as there are other franchisees and parent companies.
- Have Less control- The franchisor, when to open a new franchise, he shifts his responsibility to others. It causes him to lose control over the new franchise.
- Tied to suppliers- Every franchise deals with suppliers regularly. Even if the parent company opens up the new franchise, then the new franchise has to deal with those same suppliers. Even if you find other suppliers who match your needs, you can’t take advantage of that, as you are tied with the suppliers of your parent company.
Conclusion-
Franchisors provide tools, systems, and support so that their franchises would do up to the system’s brand standards. There are some advantages and disadvantages of franchising like everything has its pros and cons. While selecting a system of franchise you want to invest in, you should look after and evaluate the types of benefits and support you will be provided.
