What Is Franchising and its Benefits 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 a form of venture or business whereby the franchisor obtains distribution of a product, service or method through affiliated dealers or franchisees. 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. In franchising, there is usually a contractual agreement between the franchisor who is a wholesaler or manufacturer or a service sponsor, and a retail franchisee where it is allowed to conduct the specific kind of business, under an established name and the same pattern of business.
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In our global business world today, franchising is considered as the fastest growing business economic model and the most popular. A proven method of doing business is the sharing of brand identification, and this has proved to be successful in marketing and distribution system that allows people to work together. The fast food business is the immediate business that people think when they hear the word franchise. However, franchising nowadays cover more than the burger and fried chicken outlets. 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 its various advantages. Number one advantage of franchising is that you are investing in a proven business already. The next to mention about the advantages of franchising are its key attractions such as faster start up, development of customer base is also faster, and profitability is quicker to experience. The next advantage of franchising is that there is already a known and quantifiable proven formula. 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. A franchisee has a lower amount of risk for his or her investing into franchising, and they consider this as the biggest advantage of franchising. Because the franchise company can buy goods and supplies in bulk, you will be getting good deals in these areas, and you get the savings from this arrangement as well as the other franchise members. 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.
