Essay on The Pros and Cons of Franchising

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.

* 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.

Franchising is a well-known business and commerce procedure that brings together the title-holder of recognized merchandise with another business or products. This system is readily used by small businesses and companies to provide as a mean to provide authentication and support for their business by having a brand name of a well-known company associated with it. However like most business entry strategies franchising to has some

Franchising has always been an effective and efficient means of expanding businesses and there is a firmly established franchise market in the United States and the United Kingdom. Franchising offers several advantages, such as relatively unsaturated markets, transitioning economies, free-trade zones, friendly business laws, and liberalized markets and most of which come from emerging markets. Lots of multinational companies have chosen to franchise as a means to enter the emerging markets because it is governed by a contractual agreement which provides a desirable competitive advantage. (e.g. Paswan and Kantamneni, 2004; Alon, 2004). Trying to Explain the extraordinary growth of restaurant franchising within the United Kingdom and the United States has been one of the major focuses in the academic franchising literature over a couple of years. In the United States, United Kingdom, Canada, and some other parts of Western Europe, restaurant franchising has attained domestic market saturation, consequently, emerging markets stay relatively unexploited. The establishment of Restaurant franchising in emerging markets is primarily within the last 20-30 years through corporate franchise agreements and master franchises, and to some extent, conversion franchising and joint venture franchising (Alon, I., Falbe, C.M., and Welsh1

The franchisor will be able to offer assistance in sourcing the products and services that franchisees will require to operate their business, and in some cases will even act as the franchisees main supplier.

In franchising strategy,the franchisor normally has control(whether have the control) of the distribution method of the product,and franchisee is not allowed to produce the product,it can only acquire the products from the franchisor.And the franshisor can get a certain amount of fee from franchisee for its use of franchisor's brand ,trademark and customer reputation,While franchising could bring a lot of benefits to the manufacturers such as rapid,low-cost market expansion,incomes from franchisee,it also has some disadvantages such as the franchisor has to share profit with

Franchising as it is generally known today is a form of marketing or distribution in which a parent company customarily grants an individual or a relatively small company the right, or privilege, to do business in a described manner over a certain period of time in a specified place. The parent company is termed the franchisor; the receiver of the privilege is called the franchisee; and the

For businesses that experience finance, human resource and property restraints to achieving expansion, franchising is a way to expand businesses with relatively cheap and risk-free as franchisee finance the majority of the cost such as the premises, vehicles or whatever necessary to grow the business. In other words franchising is a way to secure capital for franchisor. By allowing other ambitious business people to create another branch to a small business, its enable the owner to keep tight hold on overhead, marketing costs and salary, as Harvard Business School assistant professor Dennis Campbell notes, companies which use franchising do not need to invest time and energy in investing highly-skilled managers, allowing significant cost savings not least in terms of wages. This means the franchisor can use its time and capital for other purposes. Robert E. Bennet indicated that economies of scale in purchasing could be achieved much faster by a small company expanding through the franchise route.

No major review of franchising research has ever been published. As a result, we first made an attempt to locate all published research on franchising.(1) We were aware of several articles at the time we started the study. We also searched major computerized indexes for articles on franchising. In addition, we knew of some journals that were not included in the computerized indexes but do publish

Franchising has been an influential economic engine and is vital in the expansion and growth of the business for nearly half a century (Ekelund, 2014). The inherent benefits of franchising as a business model are the key influencers of the decision of entrepreneurs opting for franchising instead of establishing a new business (Oni, Sekwele, Matiza & Pelser 2014). Beredo and Mendoza (2013) said that in order to survive in this kind of business, capital, skill, positive attitude, good location, good management and best service should be considered. Furthermore, that every franchise system revolves around its franchisees’ quality and the personal decisions that the management make with respect to their work. Understanding the cost and returns are essentials which franchise companies must work in their programs to the market and be straightforward in the assessments, with these, returns can be generated over the period (Kong & Zwisler, 2007).

It is common for people to think of franchising as an industry, and although it can be considered to be an industry, it can also be seen as a “business model”. Dr. Vinay Garg, a professor at Missouri State University took time researching franchising benefits and strategies. Garg has studied and surveyed over 1000 franchise businesses. He found that franchising could be a great opportunity for any individual to become an entrepreneur by starting his or her own business. Since franchisors such as McDonalds or Dunkin Donuts is well known to the public, the franchisee will find it less difficult to bring in customers (Mostyn).

According to Hill, Jones, and Schilling (2015), franchising is a strategy in which the franchisor or the founding company grants the franchisees, the purchasing company, the right to use the franchisor’s name, reputation, and business model in return for a franchise fee and often a percentage fee and often a percentage of the profit. The business must operate under strict guidelines, follow the rules, regulations, and standards given by the founding franchisors (Hill, et al 2015, p. 182). This creates a business relationship between the two. According to Ribeiro, D., & Akehurst, G. P. (2014) franchising has become a major driver of business development and franchisor brand equity is a critical factor with a clear impact on the perception and behavior of the franchise. Franchises brings together independent companies and establish agreements between two parties.

Franchising is a business strategy for getting and keeping customers. It is a marketing system for creating an image in the minds of current and future customers about how the company 's products and services can help them. It is a method for distributing products and services that satisfy customer needs. Franchising is a network of interdependent business relationships that allows a number of people to share and experience the brand. It is a successful way of promoting brand identification.

The idea of franchising has been a thought that dates all the way back to the middle ages when landowners would grant peasants to hunt, hold fairs, and hold markets on their land. It was not until 1858 that franchising became an important industry. Today, franchising is still one of the largest industries in existence (“The History Of Franchising,” n.d.). Franchising is an agreement between a party (Franchisor) who gives the privilege to another individual (Franchisee) to own, manage, and run his or her business in another place with certain expenses that the franchisee is responsible for and laws that the franchisee must abide by.

In the business world there are many routes businesses can take to try to ensure a successful venture. There are sole proprietorships, partnerships, limited liability partnerships, corporations, limited liability corporations, S corporations, and then there is franchising. A formal definition of franchising is “a continuing relationship in which a franchisor provides a licensed privilege to the franchisee to do business and offers assistance in organizing, training, merchandising, marketing and managing in return for a monetary consideration” (Franchising, n.d.). In simpler terms, franchising is paying someone for their business, marketing, and operations strategy, as well as the use of their name (Obringer, n.d.). Discussed next are the important roles in franchising.