Franchize: advantages and shortcomings

Franchize: advantages and shortcomings

Any sort of business has the advantages and shortcomings and a franchize – not an exception.

Purchase of the franchize grants to the user the right to conducting own business and even some share of independence. For example, the franchiser has no right to dismiss the franchisee. Moreover, he helps it to solve the current problems and provides with professional support that helps to avoid risks. After the conclusion of the transaction the franchazer helps the ward in search of a site of the enterprise and adjustment of business, proceeding from a personal experience. Such help is actual for beginning businessmen who want to open own business.

Before opening of new business the franchiser works with the franchisee over formation of skills in future business and provides it with special programs of training. Except that franchisee receives the services concerning marketing and business, and also the corresponding grants and materials. If the franchisee have any questions or problems, he can address at any time for support to the franchiser whereas the independent businessman solves the current problems at own risk.

The buyer of the franchize agrees to work under a trademark of the franchiser and to use his reputation and practices in business. For example, owners of the franchize McDonald-s, the worldfamous company working at the international market, have the right of using a company name. Besides this international franchiser is engaged in advertizing of new restaurant with excellent reputation that provides a flow of clients right after institution opening.

On conditions of the franchize contract the buyer of the franchize develops business only in the territory defined by a fraychazer. Such strategy helps to avoid the competition between owners of franchizes of the same company. Except that franchisee quite legally pays the minimum taxes that allows to begin quickly business and to get profit. Purchase of the franchize manages much cheaper, than business from scratch, and the franchiser can obtain the necessary credits and supply without effort.

However purchase of the franchize has the minuses. This type of business limits an initiative of the franchisee and demands from it observance of certain rules of business. For example, the franchisee has no right independently to expand the range of the goods, to offer the services not stipulated in the contract, to correct an operating schedule etc. It happens that the franchisee does not receive support from the franchiser, for example, concerning conducting works or management. Therefore before contract signing future franchisee should familiarize attentively with a financial position of the company franchiser and collect as much as possible information at other franchisees. To receive necessary information it is possible and it is necessary in local Association of the Franchise.

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Franchize: advantages and shortcomings
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