Advantages and Disadvantages of Franchising

Essay by sethryanwardCollege, UndergraduateB+, August 2009

download word file, 2 pages 3.0

Introduction:Liz the librarian decided she wanted to enter into the business world as an entrepreneur. She has a chance to run her own organic food shop. A high quality franchiser, Foods of Reality, has peaked Liz's interest. In this discussion board we will help Liz decide whether to franchise or start her own business or by outlining the advantages and disadvantages of franchising.

Franchise AgreementA franchise begins with an agreement between the owners of a specific business entity with an entrepreneur who wants the rights to use that entity for their personal use (Scarborough, 2009). A franchiser is the person or company that owns the business entity and the franchisee is the person or company that pays the franchiser for usage rights.

Advantages of FranchiseThere are several benefits to buying into a franchise. One of the most enticing reasons is that there is already an established business plan and most franchisers offer business expertise and resources to the franchisee in addition to the plan.

Another advantages a franchise offers is the experiences and most of the time the financial support, the competitive advantage franchisees benefit is a path the franchiser already depicted. Another advantage of a franchise is that the franchise usually offers a name brand many households recognize. These quality goods and services are the same across all franchises because the franchiser supplies the inventory and service for each franchisee to sell. Advertising while under a franchise agreement has its perks as well. A franchise's advertisements will reach many more viewers due to the fact the franchise gathers funds from all of its franchisees to for this purpose. Here is a list of the advantages a franchise may offer:Management (assistance training and support)Personal ownershipNational recognized nameStandardized quality of goods and servicesFinancial advice and assistanceCentralized buying powerLower failure rate, greater...