Advantages and Disadvantages of Franchising
Advantages and Disadvantages of Franchising. Pros and Cons of Franchising. Franchising Opportunities (Franchising Oppurtunities).
What is a Franchise
A franchise business is a business that replicates a home company’s success in another country and location – the most prominent of which is probably MacDonald’s. Franchising is an excellent way to replicate a proven business concept and generate a stream of income.
Advantages of Franchising
Unlike startups, franchises have a proven market concept and standard operating protocols that can merely be followed. It is thus much easier to try to replicate a franchise’s success than to start a business from scratch. In fact, franchised businesses have success rates several times higher than that of start-ups.
Owners would be well supplied with everything they need to begin operations: management control, product packaging, marketing strategy, staff training.
This is sometimes known as the turnkey business: all you have to do is turn the key and you’re in business.
Pros and Cons of Franchising
Disadvantages of franchising?
The franchised business model may have worked exceptionally well in the home country, but that does not mean that all franchises succeed. Choice of retail location (Small Business Location), marketing strategies, market pricing – these are all factors that you need to research on your own.
High Capital Outlay
In order to purchase the franchise rights, your initial investment can be rather high. The more successful the franchise model, the more costly it will be just to get started. Yet, there is no guarantee of success.
Most franchises are not passive streams of income. You will be heavily caught up in the day-to-day operations. While profits may be high, your time investment will also be high, at least for the first few years of operation.