Disadvantages Of Franchising

Franchising is simply treated as for expanding a business and distributing goods and services through a contract based relationship. In franchising, franchisors [whose business is handed over to a third party to manage, and with its trademark] not only specify the products and services that will be provided by the franchisees [a person or company who is given authority to do business under the trademark and trade name by the franchisor], but also provide them with an operating system, brand and support.

The first choice of business is the franchise. In a franchise, legal binding agreement is entered into between two firms, the franchisor (the product or service owner) and the franchisee (the firm to market the product or service in a particular location). The franchisee pays a certain sum of money for the right to market this product” (Rubin, 1978, p.224). The franchising is more prevalent in the restaurant industry (Hoffman & Preble, 2003). The two distinct features of this business type include; first, in order to notable service components should

Franchising is a business model that allows companies to rapidly expand their market share. According to Franchise.com (2015), there are three types of franchises: distributorships, trademark licensing, and business format franchises. When two organizations enter into a distributorship, the originating company provides the rights another company to sell their products. An example of a distributorship is when an auto manufacturing company grants rights to a dealership to sell their vehicles (Franchise.com, 2015). Trademark licensing is when one company allows another company to use their trademark (Franchise.com, 2015). The business format franchise authorizes franchisees to sell the parent company’s products and/or services as well as utilize their business model. This type of franchising is the most common and is the type needed to obtain to open a new Cold Stone Creamery.

Franchise means “privilege” or “freedom” and the word originates from an old French dialect. The history of franchising can be traced back to the Middle Ages (476 A.D. – 1453 A.D.) when kings granted franchises to specific people or groups to perform a certain type of commercial activity or hunt on their land. German breweries in the 1840s also used franchising to distribute their beer to different geographic areas. The breweries granted the franchises to certain taverns to be the sole distributor of their beer in a specific area. Isaac Singer was known to pioneer the use of written franchise agreements. In the 1850’s, Isaac Singer started granting franchises for its sewing machines because he wanted to distribute his sewing machines to customers

Franchising: it is a relationship in which the owner of the business allocates to independent individuals the right to market and distribute the goods or service, and by using the business’s name for a fixed period of time. The International Franchise Association defines franchising as a "continuing relationship in which the franchisor provides a licensed privilege to do business, plus assistance in organising training, merchandising and management in return for a consideration from the

Franchisors are increasingly having to be more and more selective in the adoption of franchisees with factors such as economic climate and the potential difficulty with growth playing key factors in the decision making process. It is not simply an ability to grow which creates a successful Franchise and nor is it the desire of any franchisor to adopt every potential franchisee. Franchisors are becoming more and more scrutinising as the global economy declines. There is a general understanding within any franchised

Franchising is a method of doing business where we have a franchisor that trains and shares his intellectual property with the franchisees that will be running the business as their own but under the guidance as well as the brand name of the franchisor and they pay him a cut of the profits

The advantage of franchising is the company that allowed copying the entire company’s concept such as it name, the product it produces, or the way it does it business. A lot of companies have chosen franchising to operate their company because it’s like the faster way to bring your company to others countries. For example, the most common and prevalent, as everybody knows the American restaurant, Pizza Hut. This is because the franchisees usually received the financial support from the franchisors, which means franchisees can enter to others companies without considering the financial issues. However, it brings disadvantages too, which is the company will face a loss of control. For example, Pizza Hut which operating by franchise will face the loss of control such as lack of innovation, inflexible working hours and argument with the franchisors may occur. For example, franchisees are not allowed to produce others products themselves, they can just sell the product from the franchisors which cause lack of innovation. When doing the decision making, that usually may cause the conflict between franchisor and franchisee because franchisees are not allow to give any opinion even thought they disagree about the

Franchising can be defined as a business venture between an individual (Franchise Owner) and the franchisor (Business Owner), who wants to expand the scale of their business to promote visibility of their particular brand and thus increase market shares. In India, franchising is growing exponentially over the last handful of decades along and the trend seems to be growing at an extremely strong pace. According to the experts, franchise business is probably the safest modes of businesses because it involves lesser investment with greater ROI. That's why increasing numbers of people are actually moving on the lucrative world of franchising.

Investors have a decision to invest in a franchise or have complete control over the business, products and employees by creating one’s own business. Many people find franchises carry less risk than the average small business and that it requires far less of their attention (Meaney, 2004). Franchises also offer the familiarity that mass advertising of big brands accomplishes. Small business owners instead must pay for their own advertising and build their own brand image which can take years and cost thousands. Some find this to be reinventing the wheel and choose franchising instead.

According to Daniels(2004), franchising is a specialized form of licensing in which the franchisor nor only sells an independent franchisee the use of the intangible property (usually a trade mark or patents) essential to the franchisee’ business but also operationally assists the business on a continuing basis, such as through sales promotion and training.

Davies J. (2015, p. 62) adds that “a franchise is generally a form of business organization in which a franchisor as owner of a trademark or trade name conveys to one or more independent entities, the franchisees, the right to market a product or service, usually within a specified geographic area and subject to a number of franchisor-imposed constraints. The wider franchise system is essentially a virtual organization comprising

The US Federal Trade Commission defines a franchise as: a business arrangement which allows for the reputation, (goodwill) innovation, technical know-how and expertise of the innovator (franchisor) to be combined with the energy, industry and investment of

There are many different manifestations of a franchise, the most common being licensing, product franchising and business format franchising. With product franchising the product

According to my point of view, franchising is simply a technique for extending a business and distributing goods and services through a permitting relationship. It is a type of business that is owned and operated by franchisees but that is branded and overseen by a usually national or multinational company. Franchise is a business that you see in different cities. They are recognizable because their company logo and products are same. A franchise is a type of business that is the same all around you go.