Franchise business occupies an important place in the modern economy. In this article we will tell you about the features, positive and negative aspects of this form of market relations, as a franchise.
First of all it is necessary to briefly outline the concept of franchising. Simplistically speaking, this is "rent" trademark. Franchise business is governed by specific agreement between the franchisor (for those who is engaged in the provision of the franchise) and the franchisee (those who receive a franchise). Latest contributions are paid to the franchisor for the right to be part of the same system. The most striking example of franchising is a worldwide network of McDonald's restaurants. But the Corporation owns only 15% of restaurants in the world. The owners of the remaining parts are distributors.
It should be noted that the franchise business has many advantages. Franchising involves the use of proven business systems. It is also worth noting that the development of the network in itself is a great advertisement of the brand, which does not require additional financial investments.
Franchisees always retain their legal and economic independence. despite the fact that the franchisor has a certain degree of control aimed at improving the efficiency of partners.
It should also be said that the franchisor does not leave partners one-on-one with the problems. which may occur at the initial stage of business. In addition, organizations providing franchise, be sure to warn partners about possible risks and how to reduce them.
It is worth emphasizing the possibility of quite successful to market through the franchise business. The fact that before beginning work under well-known brand you can count on a certain group of loyal consumers.
Franchisees have access to the knowledge base of the franchisor. Another positive point is low cost of advertising. The fact that franchisees typically start their activities as part of a known network, so at first will be enough advertising in the local market. Franchisors are always trying to provide its partners with regular supply of necessary products and raw materials.
You also need to say that the franchise business has a number of disadvantages. First of all, partners are required to follow certain rules and restrictions. even in those cases when it does not bring the maximum benefit to the business. Suppliers may be only those organizations designated by the franchisor, and this leads to the fact that the raw material is very often purchased at inflated prices.
In addition, for the franchisee can be set severe restrictions on the exit from the business. for example, you may not be allowed to open a competing organization in a certain area during a certain period of time. Sometimes there are situations when the owners of the franchise decide to close their network. In this case, you will be able to do business only until the end of the period specified in the contract, and then you have to think about the beginning of new things.
Today, franchise business is one of the most common. Entrepreneurs become part of the networks, as consumers trust these companies. The reason is the quality of products and services. In addition, large companies cherish their reputation. The modern franchise business includes a network of restaurants, cafes, shops, software support and more.