The Mechanics of Going Into Franchising Franchising is simply defined as the method of doing business where the licensed trademarks, systems and methods of doing business is being done by a franchisor from the franchisee in exchange for a royalty fee or a franchise management fee. Franchising is another form of business by which a product, service or method of a franchisor is being obtained by a franchisee. In this venture, the franchisee will be given support and assistance by the franchisor in the organization, training, merchandising, marketing and direction in return for an agreed consideration. 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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Considered as the most popular and the fastest growing business economic model is franchising. 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. Usually, when people think of a franchise, they immediately think of the fast food business. But today, franchising is going beyond the burger and fried chicken shops. Nowadays, the franchise concept has spread to more than 70 various products and services like auto repair shops, children’s art centres, fitness clubs, law and consulting practices and other home based businesses. The model of franchising has now become a major economic engine all over the globe and is providing an increased opportunities for companies and individual entrepreneurs too.
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There are several advantages in franchising. Number one advantage of franchising is that you are investing in a proven business already. 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. 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. With franchising, the franchise company can purchase goods and supplies in bulk thus giving you better deals and savings, as well as to the other franchise units, and this is a great arrangement. Because the product or service is known to the consumers, they feel comfortable in buying the product or service, and this is a big advantage in franchising.