HOW FRANCHISING IS BENEFITING FRANCHISERS AND FRANCHISEES One of the most famous business models that majority of entrepreneurs enchased these days us the franchising business. In this model a company is setup which is granted with the right to market the products and services of the parent company. Individual interested in franchising business focus on ideas and strategies required to develop a business rather than producing product or service. The concept will not be considered wrong such as in franchising industry, franchisees have to sell the business which is itself treated as a product. Collectively the benefits of franchising, for both franchisers and franchisees, are discussed below. Possibilities for expansion: Great opportunities are provided to both franchiser and franchisees to expand their businesses irrespective of the international boundaries and perform operation in different locations. The sellers explore new markets and open opportunities to the entrepreneurs to introduce products on company’s behalf. In comparison to the cost occurred in opening and running an outlet on your own, franchise business considerably requires less investment for business expansion. It gives sellers the opportunity for not remaining confined with available capital but also continue to expand businesses as long as franchisee are available and willing to invest in the business. Rate of Return: There is a lot more potential in franchising business to provide higher rate of return on the capital invested as compared to traditional businesses. In this business model the most of the financial risk of setting up the outlet is taken by the franchisees. The franchisers only needs to develop an operations manual and a franchise plan, once business expands then there are very few expenses to incur. Franchisers also get the opportunity to saves on advertising cost as the new outlet opened by franchisee at different location helps in promoting the brand name. Branding: The most important factor of franchising is that it helps in branding your product and services around the globe. The identity of brands enhanced and expands at various locations of the world. This acts as an added advantage, as it helps in creating familiarity among customers regarding your product and services. The regular customers are able to recognize the product and services available in different cities and may also opt for the same they used before. Skills: This business model offers the franchisee to learn skills by providing training depending on the type of business. Franchisees also receive training on the periodic basis as the parent company
visits their location and offers training for the staff. Usually in the initial stage, human resource assistant is provided by the seller that assists franchisers in starting operations and hiring of new staff members. Reference: http://www.researchomatic.com/New-Research/Franchise-Agreement-86305.html