Advantages And Disadvantages Of Business Franchising

If you are looking for advantages and disadvantage of buying business franchising. This topic will complete guide you step by step about all the pros and cons also have examples and types. So let’s move toward topic;

What is Franchising?

Franchising or tuck shop is the relationship and agreement between the owner of the business and the person who have low investments and want to open as a small part or component the name of company. The franchisees are able to use the name of company and are able to managing, training, marketing, merchandising and organizing etc. There are a lot of advantages and disadvantages of franchising business, let’s have look;

Advantages of Franchising

1. Low Capital

We are reading the advantages of franchising and the first thing about buying a franchising. That you need no much capital, with low investment people can buy the franchise and setup business easily.

2. Popularity

Opening a franchising in these types of areas, where have not any branch of such type services before. This trick make your franchise popular very fast in days and help to grow business and financial position as well.

3. Risk Reduce

That is very benefit thing for the franchisers that investing in small business shop will reduce the risks of loss in futures. Because everything in franchise is in limited like, chairs, tables, computers and staff etc. If your franchising business are not running in case of this you have less loss in business.

4. Experience

The most and better advantages of owning the franchising will increase your experience in business, communication, in finance department also you will better understand that the profit and loss ratio. After getting best experience you can start your own business.

5. Good Will

Different types of people visit to franchising for services as your popularity grows, this popularity also increase your business goodwill. We can also use the goodwill as a business capital.

6. Public Advantages

Let’s suppose there are one bank in the city and all the citizens move to main branch of bank for their services. In case of this every person should wait very long and always be rush in bank and workers of bank also disturb always. And if there are ten or twenty branches of this bank in one city that will easy for public to visit nearest branch or franchise of work solutions.

7. Job Opportunities

Opening a new franchising business also produce the more job opportunities. Also produce and give chances to the new comers to learn and earn something.

8. Value of Era

Opening a franchises also increase the value of shops beside it. Peoples also invest in more business and also open tuck shops beside it and the place become more popular.

 

Disadvantages of Franchising

1. Agreement

Contributing in franchising business means you are going to bond with company. And will accept all the terms and conditions of franchise company agreement.

2. Bad Reputation

In the list of disadvantages of franchising the second point is about bad reputation. Bad reputation by the other franchises may also impact on your franchise.

3. Profit Share

All the profit (Percentage of sale) of franchise are usually share with the franchiser.

4. Business Changes

As a franchiser you are not able to make changes in the terms and the laws of business, which you would think harmful for business. And must by follow all the rules and changes make by the business/company owner.

5. Legal Costly

Small franchising business are very costly in situation of facing the legal issues. The owner of small franchises are not able to fight in legal activities due to less money.

6. Headache

Buying a franchise is always a headache for you. Because you would be always worry about it and this will make you totally mental. So you should be always strong and ready to face any difficulty.

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How many types of franchising?

There are Four main types according to experts.

• Product Franchises
• Manufacturing Franchises
• Business Franchises
• Single Operator Franchises

Examples

• Pizza Hut
• KFC
• Subway
• Burger King
• MacDonald’s etc.

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