Some of the advantages with owning a franchise are the comfort of not having to be totally in control of the business. A franchise is usually ran by a someone who is already extremely wealthy,An advantage to a franchise is seeking success at a lower failure rate. A disadvantage is being limited to your earnings, meanwhile a business which strictly belongs to one person may see a 300% increase in profits. Mcdonald's first difference that helps towards tremendous success was being able to franchise correctly. Owning a company millions of people where interested in providing money for. Krocs initial fee to opening up a mcdonald's was a 950 dollar fee, he was more interested in saleing his product. Krocs took a different approach when he started franchising his business he stopped pursing wealthy men who seen his company as an investment and pursued families whos lifes he could change and promising a better future. …show more content…
Krocs initial plan with a different style of franchising wasnt so easy. He had to give up stock in a way of paying workers in order to keep his businesses running smoothly. Years down the line Krocs method has evolved so much that franchising is seen as the safest way of business for oneself.A disadvantage in franchises are not the investors or products its the main company.Subway for example was used in the book to explain why they are a bad franchise, they usually franchise to people who are of immigrant decent and force them into deals they do not completely understand, just for them to be able to live comfortably. Running a franchise has been established to helping a business run effecitly not so much as
McDonald is known for the quality the restaurant serves, and the opportunities the McDonald restaurant offer. McDonald's has been
1. Franchisees gain numerous advantage when they purchase a franchise. First, while a franchisee may be opening a new store, it is part of an already established business and system. This means a franchisee has access to turnkey operations, allowing an increased speed to establishing and growing the business. Franchisees also get support for management and training activities, as well as financial assistance. Going hand in hand with this, a franchise already has an established brand name, quality of goods and service which have been standardized across the franchisor’s larger company, and national advertising programs from franchisors. Franchises also have large-volume, centralized buying power. A franchise has proven products, and
McDonaldization of society- the process by which ordinary aspects of life are rationalized and efficiency comes to rule them, including such things as food preparation p. 173
Schlosser tells us about how many companies expand their businesses by selling franchises. Selling franchises has been successful for many companies such as McDonald’s, Subway, and many others were able to expand using this route. In fact, some fast food companies open up some many franchises, that whenever the same restaurant is opened close to another one, that managers complain of losing business. Another thing the books informs us on is that when a franchise doesn’t work out then the fast food company has no choice than to close that area. Subway does this very often and is called “The worst franchise in America”. Next, the book talks about economics. There is a lot of risk taking when it comes to being a franchisee for a fast food restaurant. People who would like to become future franchisees can spend almost 1.5 million dollars just to become one. Before purchasing a franchise, people have to consider whether or not it will be worth the money, because if it doesn’t work out there is no way that
Buying a franchise may reduce your investment risk by enabling you to associate with an established company. But the franchise fee can be substantial. You also will have other costs: for example, you may be required to give up significant control over your business while you take on contractual obligations with the franchisor.
Another advantage of a franchise is that you use a recognized business name and reputation also the franchise benefit from advertising or promoting. The franchise has to share all the profit with the franchisor while Tesco which is a public limited company have to share their profit between a great numbers of people. Shares can be advertised and sold through the stock exchange. Another advantage of a public limited company it has more chance to become successful because they have thousand people who working for it, with many skills, idea and experiences. Franchisee is different from a public limited company has it is dependent on the franchisor skills. If the franchisor goes out of business or gets a bad reputation, this will cause problems in the business.
Pros. There are many pros associated with buying a new business format franchise. First, since the franchisee obtains the parent company’s business model, individuals who are interested in starting a new business but are not confident in their abilities or lack experience in business, will receive a successful model to emulate (Williams, 2011). In addition, the franchise may also help the franchisee determine the best location for the business, help with the acquisition of equipment, and may help finance the endeavor. Next, most
A good franchise offer training and support as owner will not know how to run Jiffy Lube or Subway without guidance. Franchisor have advantage from buying power and efficiency due to large scale of franchise so they can negotiate lower prices for the products and services needed to run business. The startup cost can have a wide range depending on the franchise, therefore most franchise have financial loan program (Geoff, 2013).
The disadvantage of parent company franchising is that they don’t get to keep all the profit just the percentage the parent company and franchisee settled upon. Second disadvantage for the parent company is that they don’t have absolute control over all their stores as they are handled and operated by the franchisee
In North America alone, new franchise opportunities are popping up daily, giving these interested individuals a variety of tools designed to grow both their businesses and the studies of their customers. Just like any other venture, though, there are both advantages and disadvantages to purchasing a franchise of a larger parent company.
* Franchise: In a franchise operation, the Franchiser licenses the rights to its name, operating procedure, etc. to another business, the franchisee. A franchisee basically buys a licence to operate a ready-made business. Some advantages are bargaining power with suppliers and a high success rate. Some disadvantages are big businesses don’t always make a profit, owning a franchise makes it difficult to get out of.
There are also cons against choosing the franchise. First, the amount of control and autonomy that the business owner will be significantly less than the independent business owner. As a franchisee, you do not “own” the business, but are licensed to operate the franchise store. Secondly, the upfront financial
It has its advantages and disadvantages to franchise the business. It is a careful decision to make for anyone to invest a lot of money into a franchise and everyone should be comparing pros and cons.
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
Not having to answer to a corporate boss is the dream of many and the flexibility that owning a business franchise creates provides this option. Success is not reached by simply creating a business, however. The level of success is measured by the size and efficiency of the business. Business growth is the driving force of the economy. The additional jobs and revenues created when a business expands allow the economy to grow at exponential rates. One of the fastest and most popular ways to increase the size of a business is to turn it into a franchise, which can then be purchased by individuals. Franchising provides opportunities that are beneficial to both the parent company and the purchaser. The company that owns the business can expand