franchie business Essay

Submitted By lucy56
Words: 510
Pages: 3

ADVANTAGES AND DISADVANTAGES OF FRANCHISHING

An entrepreneur can wish to set up a new independent business and try to win customers and be successful. An alternative is to buy into an existing business and acquire the right to use an existing business idea. This is called franchising. Opening a franchise is usually less risky than setting up as an independent retailer. The franchisee is adopting a proven business model and selling a well-known product in a new local branch. For example subway is the biggest franchisor (who sells the right to use the business idea in a location). The franchising a very good business to be involved in, however it comes with its pros and cons. One of the main advantages of franchising is working under a well-known brand name such as subway has great benefits for franchisee. You can also save time and energy by not worrying about generating publicity to raise the awareness (advertising) of the business – customers will know what to expect from a big chain. Having an established market means the business will pick up really quick start making money easily .Franchisee don’t have to worry much about competition as the business is already world-known. Another advantage is that like an independent business owner, the franchisee won’t be left alone. The franchisor will give you advice and training programmes and they will give financial help the start of the business. The increased security and reliability of a large firm behind you means that banks will often offer you substantial loans to aid your start-up costs. On the other hand it also has its disadvantage, the initial and continuing fees: Franchisors will charge new franchisees a fee to start-up a business using their brand name. Although this can be under £1,000, the amount varies greatly according to the franchisor. Furthermore Franchisors will take a regular slice of your takings as royalty fees also the payment of the employees has been…