For instance, in order to attain a financial return, the franchising corporation, the franchisor, grants a certificate to its franchisees, permitting them to make use of a complete business array. This involves teaching, funding and the corporate title, therefore enabling them to cope with their own dealings to exactly similar standards and formats as the other units in the franchised sequence. Indeed, this statement is correct because franchising is meant to help entrepreneurs grow and develop themselves greatly. However, it is important to note that for all these to be achieved, the two parties, franchisor and franchisee have different responsibilities they must accomplish in order for the arrangement to function. Just as it is noted in the article, franchisors have a contractual or at least an implied responsibility to maintain their system`s brand appearance and standing through marketing and promotion, and through the control of other participants in the franchise system.
But this gives them the chance to run a business that is already familiar to people, instead of starting a business from scratch. There is often already training programs and financial assistance available to these starting franchises. Opening a franchise business can be very expensive. On top of the building, supplies and employees, they must pay a franchising cost to the owners. This can be a relatively small amount, but it can also be quite substantial.
The franchisor will not pay the manager and employees as the franchisee has already included them in his or her payroll. With franchising, the franchisor will have talented and motivated people to manage the business in different locations. This will provide the recommended expertise in running the business. This will therefore provides numerous advantages being offered by the economies of scale. Economies of scale will work to the advantage of the franchisor.
The best examples are McDonalds, KFC, Coca-Cola, Pepsi, Hertz, and Avis etc. The benefits of using franchising as market entry mode are far reaching. Due to the role franchisee who has motivation to operate the business and local knowledge of the market, it is much more rapid way to enlarge business activities over a large area with minimum investment than the other forms of market entry strategy (Chee & Harris, 1998, p. 311). At the same time, the franchisors get huge amount of money as royalties, so it is very profitable for them ans well as they have maximum control over the operations of the business (Chee & Harris, 1998, p.
Independent business owners do not need to enter into contractual obligations with the franchisee and not the terms of the law set by the business owner before. As a business owner, you are your own boss. You take all the decisions. You set your own hours and work independently. Depending on the type of business you could work anywhere.You can use as owner, principal, or the president on your resume.
Our company is offered in-progress support. Disadvantages to owning a franchise:- i. Running the operation according to certain limitations and procedures set by the franchisor of Walmart (goods or services offered, pricing, etc.) ii. Poor performance leads to a system-wide damaged image to the
The company isolates a few of the franchisee duties to make it easier for the franchisee to operate the franchise. The final disadvantage is inventory shipments being late. This is the biggest problem that most franchises. When the franchise orders new inventory, the wholesaler takes some time to get the order ready to ship. The wholesaler also takes time to deliver the supplies to the franchise.
INTRODUCTION: Changing business ownership can be very challenging. There are factors and aspects that need to be looked at to make sure you are in a place to do so without spending all your resources. Especially changing from a sole trader [a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business as stated by “E-conomic, Sole Trader- What is a Sole Trader?] to a franchise [a right granted to an individual or group to market a company's goods or services within a certain territory or location as stated by “About Money- What is a Franchise”]. The purpose of this report is to analyze the Subway franchise, its advantages, disadvantages and advice Johnny on whether
(Top management’s) tolerance for risk: this determinant affects the concept of the perceived risk in a negative way. The more risks averse the top management of a franchise is, the higher the degree of risks will be that has to with internationalizing a company’s operations (Eroglu, 1992). 5. (Top management’s) perception of the firm’s competitive advantage: can be served with two purposes. Firstly, a product that is either unique or well-reputed increase the probability of the franchise’s solicitation in both the domestic and international level.