What are the Various Factors Involving Franchising The method of doing business where the licensed trademarks, systems and methods of doing business by a franchisee is being followed by a franchisor in exchange for a recurring consideration like a royalty fee or a franchise management fee, is called franchising. Franchising is another form of business by which a product, service or method of a franchisor is being obtained by a franchisee. The organizing, training, merchandising, marketing, and giving direction factors of the business are given to the franchisee by the franchisor in exchange for some fees. There is usually a contractual agreement between the wholesaler or manufacturer or service sponsor called the franchisor, and the franchisee who is given the go signal to conduct the given form of business under an established name and pattern of business.
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Franchising is today’s most popular and fastest growing business economic model. In this business model, business relationships allow people to share brand identification which is a proven method of executing business, and at the same time a successful marketing and distribution system. People generally come to think of fast food industry when it comes to franchising. But this is now changed today as franchising has expanded to beyond burger and fried chicken restaurants. In the modern world of franchising today, different products and service areas that span over 70 recorded types of businesses are venturing into the likes of auto repair shops, children’s art centres, fitness clubs, law and consulting practices, and several home based businesses. There is now an increased opportunities for global companies and individual entrepreneurs too in following the business model of franchising, and thus it is turning into a major economic engine in the world.
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Franchising has several advantages. One advantage is that franchising is already a proven business to invest in. Next advantage is that in franchising, there is a faster start up of the business, the customer base is developed quicker, and you experience profitability also faster. Another positive thing about a franchise is that there is already a known proven formula that is quantifiable. One thing advantageous also about franchising is that there is an available training and owner transition, plus a full control of strategic direction and ability to check the company’s history and past records. In franchising, the biggest positive aspect of the business is the lower amount of risk that the franchisee takes for his or her investment. One great thing about franchising is that you get better deals on supplies because the franchise company can buy the goods and supplies in volume for the entire chain, thus passing the savings to you and the other franchise units. And lastly, but definitely not the least advantage in franchising, the customers of the franchised product or service are dealing with the known rather than the unknown, and this makes customer patronize the franchise.