Franchising Advantages And Disadvantages

Good Essays
As firms continue to expand their operations, they have often relied on franchising to create a more prominent presence nationwide. While franchising may seem to be a natural business practices, it is not without its share of benefits and hindrances. In the case of benefits, franchised firms have their brand’s pre-attached reputation which facilitates attracting customers as they already know the brand compared to an independent establishment. This assists in reducing advertising costs as they are spread nationwide and does not require introducing customers to the brand. Another benefit of franchising compared to independent businesses is that their startup costs are relatively lower as the franchisor is solely responsible for purchasing the…show more content…
One instance of this is that independent retailer provides the owner with greater empowerment and creative control over business operations compared to being confined to a franchisor’s requirements. This advantage is particularly beneficial for aspiring entrepreneurs who wish to gain a unique foothold within the market rather than conforming to run-of-the-mill options. On a similar note, independent businesses are able to have greater retain of their profits without having to pay royalties to the parent company, which provides owners with greater economic freedom to invest in new equipment/product offerings compared to having everything controlled by an overseeing organization. By allowing greater control over one’s profits, this allows the individual firm to have greater control over day-to-day operations and maintaining the business rather than waiting for assistance from corporate. Finally, if an independent business allows to expand its operations into multiple units, the firm is granted the ability to adapt their product offerings geared towards local tastes and lifestyles, rather than a uniform offering. This is particularly evident in the restaurant industry as independent firms are allowed greater freedom to rotate menu offerings based on regional demand compared to franchised restaurants which offer the same products
Get Access