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 (the franchisee) and the franchisee (who gets the franchise). The latter pay contributions to the franchisor for the right to be part of one system. The most striking example of franchising is the worldwide chain of McDonald's restaurants. However, the corporation owns only 15% of restaurants in the world. Owners of the remainder 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 itself is an excellent advertising 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 the 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 is that even before the start of work under a well-known brand, you can safely rely on a certain number of loyal consumers.
Franchisees have access to the knowledge base of the franchisor. Another positive aspect is low advertising costs. The fact is that usually franchisees start their activities as part of a well-known network, so at first there will be enough advertising on the local market. Franchisers always try to provide their partners with a regular supply of the 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, it may be prohibited to open competing organizations in a certain territory for a certain period. Still sometimes there are situations when the owners of franchises decide to close their network. In this case, you will be able to engage in business only until the end of the term specified in the contract, and then you will have to think about starting a new business.
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. Modern business franchise includes a network of restaurants, cafes, shops, software support and much more.