Wednesday, 22 January 2014

Franchises advantages for the franchisor

  • Rapid expansion. The franchisor is able to expand his business using others people's money. Franchisees provide the capital to open new outlets, enabling the franchisor to build a chain more rapidly than might be possible throught relying on his own resources alone, or borrowing money, or raising equity finance. Rapid geographical coverage is especially advantageous when a new product is being bhrought to market, to be one step ahead of the competition is fine, to be a country mile in front is better still
  • Better management performance. Becouse franchisees own and run each new outlet, they are almost certainly better motivated, harder working, and keener to contain costs than are salaried managers. This wellspring of dedicated energy helps the franchisor to increase market share, maxiise effeciency and improve profitability.
  • Franchisees are recruited locally and bring to the business the benefits of local knowledge and possibly contacts.
  • In some respecs, the franchisor has greater control over each outlet than might otherwise be possible with geographically widespread chain. This becouse to some extent franchisees are tied to the franchisor, the may, for instance, be obliged to buy supplies or equipment from the franchisor. Each outlets in the network sells the franchisor's products or services and no others, wich is preferable to having them on sale alongside a competitors.s products. The franchisor decides how the products are to be presented and sold, further enhancing his ability to maintain margins.
  • Since each outlet is owned and run by franchisees, they assume responsibility for tasks such as staffing, payroll, and controlling operating costs. This allows the franchisor to maintain a relatively small head office staff.

Franchise Indonesia (Advantages of franchises for franchisee)

Advantages for franchisee

  • A proven business concept, with a well known trade name, corporate image, and tried and tested product or service. This should make it much easier to get started than would be that case for someone going it alone from stratch.
  • Reduced risk. Any new business venture involves the possibility of failure or disappointment, but franchising, while not completely eliminating risk, sets out to contain it. It does this throught pilot testing, training franchising, and offering them continuiting support and encouragement.
  • Franchisess should be able to buy supplies, ingredients, equipment, and so on at favourable rates owing to the bulk purchasing power of franchisor.
  • Easier finance. The high-street banks, no pushover as far as business is concerned, have come to recognise franchising's advantages over other start-ups, and usually prepared to make finance more readily available for new outlets of rezognised franchises.
  • Previous experience not required. Few people have run their own business before and many are unwilling to embark on what is often a lonely and arduous venture. Franchising's singula contribution to the economy is to take people with no previous experience of selfemployment and equip them to start their own independent business And because a franchisee is part of a larger, supportive organisation there is not the sense of isolation that can afflict business people who set off on their own.
  • Exclusive territory. It is usual for the franchisorto grant to a franchisee exclusive rights within a geographicl territory, often a postcode area.This offers a measure of protection against competition but only of course from others within your network, there is nothing to stop franchisees from anaother competing franchise from mucling in on your patch.
  • As franchisee your enjoy a sense of independence and, all being well, ahouls see a direct relationship between the success of your business and the effort that you put into it.
(how to choose a franchise by iain murray)




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