Advantages and Disadvantages of Franchising

Introduction

Franchising is growing universally and there are brands such as retail and service brands that are in that category. Franchising drives the marketing and distribution services. There are companies in the world today that are franchised business and many of them are successful and there are some that are not so successful. However, when franchising a business is successful, there are great opportunities for that Franchise to grow even larger, but when there becomes a downfall in it, the Franchisee has to come up with a formula that will allow the company to level off its foundation and begin to start over. Franchising is known as a business model. It’s a business model that share a brand name from different owners. The trademark allows the company to access its strategies and trademarks that it has in the company. The reason why people Franchise and buy into franchising is because it is a cheaper form of expansion. It grows rapidly when managed correctly. You can Franchise any type of business you want to. That’s why everyone is going into that part of business. Franchising differs from most companies when it comes to distributing and license agreements. One thing that is important about franchising is that it is able to protect its brand image. Brand image is vital when it comes to franchising because the Franchise has to be known globally. For instance, when someone see the brand image in a magazine, they automatically know that brand because of the marketing strategy of that company. For example, when people see the golden arches, they know that’s McDonalds.

McDonalds has established a brand that can’t be taken away from them. The golden arches are their trademark for that Franchise. Ronald McDonald is also a brand for McDonalds. When kids see him, they get excited and want to stop there because they see the arches and they see Ronald standing in front waving with a smile. McDonalds has created a positive perception to the citizens in the world that makes them continue to go back and give them their business. The widest used model for franchising is also entitled business format. When establishing a Franchise under business format, the franchisor gives the Franchisee the right to market goods in a certain territory. Franchisors provide various support. It includes initial training, approved sources of supply, and selection assistance. Many chose franchising as their business because franchising provides opportunity for market diffusion with lease economic risk. However, the Franchise system allows the Franchisor to obtain control over the locations of the Franchise; protecting the Franchisor. Franchisees gain their profits by investing in a system that will eliminate the pitfalls that are affiliated with creating a foundation of a business. When people are considering whether or not they want to Franchise, the important thing to be aware of is the restitutions