Advantages And Disadvantages Of Franchising

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Introduction At present concept of franchising and management agreements appears to be common in business, because these agreements can benefit both sides. Franchising is one of the most frequently used and wide spread tool for the business development all over the world. This tool contributes to the rapid extension of the different networks of numerous companies, which without its development would have no such chance of success. The most successful franchises connected with the everyday human needs. According to Kathryn Shaw, franchise “is typically defined as a contractual arrangement between two legally independent firms, whereby the franchisee pays the franchiser for the right to sell the product or the right to use its trademarks in a…show more content…
Regrading the staff recruitment within franchises, only franchisee is responsible for this task. Furthermore, franchising increases market penetration, it means franchisees appear to be part of local community and this gives them an opportunity to gain new business. International potential is also included in franchising list of advantages. If a company has serious intentions to expand its business internationally, franchising multiplies chances to achieve such a goal. It allows to adapt the business to the foreign market. As a result, it is obvious that there are numbers of reasons why franchising is useful and beneficial for business(“Reasons For Franchising Your Business”,…show more content…
The first reason is that contract management significantly increases financial value. In case contracts are managed improperly, the income is constantly decreased. Therefore, if an organization strives to research, execute and approve contracts more efficiently, it will strengthen financial performance. At present Contract management allows to reduce operating costs. At present such things as ineffective negotiations, inappropriate contracts extremely slow down business processes, which cause an impact on the final result. Moreover, every extra day causes the destruction of business and reduction the company’s income. Consequently, Contract management preserves business and decreases operating costs. In addition, business always involves different risks which extremely difficult to except. However, due to contract management all compliance risks are reduced successfully. Eventually, contract management appear to be essential part for building infrastructural growth of
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