What Is Franchising and its Benefits
The method of doing business where the licensed trademarks, systems and methods of doing business by a franchisee is being followed by a franchisor in exchange for a recurring consideration like a royalty fee or a franchise management fee, is called franchising.
Franchising is a form of venture or business whereby the franchisor obtains distribution of a product, service or method through affiliated dealers or franchisees. In this venture, the franchisee will be given support and assistance by the franchisor in the organization, training, merchandising, marketing and direction in return for an agreed consideration.
The franchisor or the manufacturer, wholesaler or service sponsor, and the franchisee, are involved in a contractual arrangement that allows the franchisee to conduct a given form of business under an established name and in accordance to a given mode of business.
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In our global business world today, franchising is considered as the fastest growing business economic model and the most popular. Sharing of brand identification is allowed in this type of business relationship among people, and has been a proven way of doing business and being successful in marketing and distribution system. People generally come to think of fast food industry when it comes to franchising. But today, franchising is going beyond the burger and fried chicken shops. Nowadays, the franchise concept has spread to more than 70 various products and services like auto repair shops, children’s art centres, fitness clubs, law and consulting practices and other home based businesses. The model of franchising has now become a major economic engine all over the globe and is providing an increased opportunities for companies and individual entrepreneurs too.
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Franchising has its various advantages. First advantage is that franchising has been made into a proven venture already to invest into. Another key attractions in franchising are that there is a faster start up of the business, a customer base is developed also faster, and you experience profitability quicker. Another positive thing about a franchise is that there is already a known proven formula that is quantifiable. With franchising, an owner transition and training is available, and you can have full control of strategic direction, and reviewing of past records and company history can be thorough.
Considered as the biggest advantage of franchising is the reduced amount of risk an entrepreneur take for his or her investment. One great thing about franchising is that you get better deals on supplies because the franchise company can buy the goods and supplies in volume for the entire chain, thus passing the savings to you and the other franchise units. And the last but definitely not the lease advantage if you go into a franchise business is that your customers are dealing with a known product or service, making them go and buy the said product or service.