Franchising is a well-known business and commerce procedure that brings together the title-holder of recognized merchandise with another business or products. This system is readily used by small businesses and companies to provide as a mean to provide authentication and support for their business by having a brand name of a well-known company associated with it. However like most business strategies franchising to has some draw-backs associated with it. Some of the major advantages and disadvantages of franchises are listed below:
Advantages of Franchises
One of the major advantages of franchises is the established name recognition it provide to the business. If a small business is associated and linked with a big-business then there is a high probability that the small business would propel due to the firm backup and support of an established big business. Running a small business under the franchisor's name and organization is very beneficial for businesses that can't afford much finance and capital investment for their own business.
Another major advantage of franchises is that when a business is associated with a franchisor then the big-business themselves help in corporate marketing of the small industry or business they are providing support for. Having the interest of big-budget industries in a low-budget business is a very effective marketing tactic and these franchises policy ensures the proper marketing of a small business.
An advantage of franchises is the bulk purchasing power it gives to small business and industries. Since most of the initial financial burden is provided to the business once it's franchised by the franchiser therefore this enables the business to buy equipments, products and other necessities to run the business with ease and without worrying about the financial investment.
A major advantage of franchise is the training and management facilities the franchisor provides to the business. A company which provide capital and investment to any small business have vested interest in the success of the small business. Therefore the companies that provide franchise ensure that the business in which the money is being invested is run and manage properly. The big-businesses and industry provides all the necessary training to the small business staff and provide additional resources and decision-making capabilities to a small business.
Disadvantages of Franchises
Disadvantage of franchises includes the indulgence of a big-business into a small business. The creative control that a small business owner have is often hinder when franchising in done. Any decision which is to be made is to be consulted and approved by the franchisors. This limits the authoritative control of the small business owner to a great extent.
Another disadvantage of franchises is reaching a general agreement on terms and conditions. There are several occasions when the term and conditions imposed by the investors and franchisors are biased and getting a firm deal with the companies safe-guarding the interest of both parties is a complex task.
A disadvantage of franchises is that the much time is required while selecting a franchise. A complete and through research is required to select the right franchise and to determine whether it would work for the business or not.
Another disadvantage of franchises is that this is a complex procedure and there are numerous instant during the business when heated discussion and disputes occurs between the small business and franchisor.
