Advantages & Disadvantages of Owning A Franchise

Looking at life as an entrepreneur, it is important that the definitions of a franchise business opportunity and a start-up business to understand. Of course there are pros and cons of each type of store. In this article we will discuss the pros and cons have to be a franchise.

FRANCHISE:

A franchise is a right of an individual or a group given an undertaking goods or services marketin a particular area or city. The franchisor (the company owner) sells the rights to the franchisee and then typically receives a fee for ongoing support, and therefore have a vested interest in the success of each franchise.

Franchising began in the 1850s, when Isaac Singer invented the sewing machine. To his machines to distribute outside its geographical area, and also the appropriate training to customers on the use of machines, Singer began selling licensesEntrepreneurs in different parts of the country. Today, many of these franchise opportunities are advertised on the Internet and other media. Examples of franchises include Carvel, Tutoring Club and Liberty Tax Service.

Advantages:

There is a higher probability of success since a proven business model formula is available. The products, services and activities have already been established.
Bankers usually look at successful franchise chains such aswith a lower risk of repayment default and are more likely to loan money based on this premise.
The corporate image and reputation is already recognized. Consumers are generally more comfortable purchasing items they know and work with companies they know and trust.
Franchise companies usually provide extensive training and support for their franchisees in the effort to help them be successful.
Many times products and services are advertised on local and nationalLevel of the major franchise companies. This exercise helps increase the sales for all franchisees, but individual franchisees do not take costs.

Disadvantages:

Franchises can implement costly. In addition, many franchises require ongoing licensing fees cutting into the profits of the franchisee.
Franchisor franchisee is usually required to follow their operations manual at a discount in order to ensure consistency. This limits the creativity on the part of all Franchisees.
Franchisees must be very well established in the following directions in order to keep the image and the level of service quality already. If the franchisee is not capable of running a quality business, or any appropriate means, this could curtail success.

Sometimes the franchisor lax on their commitment to franchisee support. Moreover, they can make bad decisions that would have a harmful effect on the franchisee. Therefore, it is important that any research> Franchise concept thoroughly before signing of agreements.

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