Franchising is a
method of distribution or marketing in which a business (the franchisor) grants
a contract to an individual or business (the franchisee) the right to carry on a
business in a prescribed way in a particular territory for a specified period.
| Rapid penetration of
market |
| Use of other people’s
money and energy to expand business. |
| Economies of scale. |
| Ideas from other franchisees and franchisor. |
| Loss of control. |
| Giving away profits and
ideas. |
| Failure of franchisees to
follow rules. |
| One bad franchisee contaminates all. |
| Bulk buying power. |
| Planning permission
already obtained. |
| Market studies already
carried out. |
| Pooled resources to allow
greater advertising. |
| Shorter learning curve. |
| Lower capital outlay. |
| Assistance from franchisor
for administration, marketing techniques etc |
| Help when unwell. |
| Pay royalties when not
making profits. |
| The franchisor may go
bust. |
| Poor business activity of
another franchisee or franchisor may refect on them |
| May be forced to buy
product supplied by franchisor which may not be cheapest. |
| Lack of flexibility- business methods dictated by franchisor. |
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