Franchising - A Powerful Business Growth Vehicle

Franchising is considered most powerful growth vehicle for a business. Both franchisor and franchisee can mutually benefit from the business model according to the terms of the franchise agreement between them.

Faridabad, India (prHWY.com) December 13, 2012 - In franchise business model, a company's well established business system is replicated by a franchisee by paying initial franchise fee and ongoing royalties to the franchisor. This model drives growth of both parties by enabling them to leverage each others strengths. Brands are able to utilise other people's capital to grow the business more swiftly. In case they chose to do it by own or borrowed finances it brings inherent risk. While most of people want to take a franchise as they would like get started without much risk and quickly. Ownership of franchise business can be a life changing experience for aspiring entrepreneur. It is an ideal choice for those who want to be their own boss and expect to make good returns on their investment in short span.

Franchise business model brings numerous advantages for brands as well as their partners.

Advantages for franchisor

Most of the companies want to expand their partner networks for the growth of their brand and franchise expansion model is good alternative for them. It is a system which lowers their capital expenditure and needs as well. The brands expecting to build an image on a regional level and attract the local consumers move from company operated system to franchise route and open the stores with franchisees. However revenue will fall, as they aren't getting sales totals but they may enjoy many reduced expenses in the whole process. Moreover, they reap the benefits in the form of branding and royalty fees. Although sometimes companies also bear costs related to legal paperwork etc but they benefit from eliminating the costs of starting stores on their own, then running and maintaining them.

Advantages for franchisee

For investors, there are several franchising business opportunities available in the market. If they succeed in choosing the right one, it will definitely give them better chances of success in short period. Any good brand which has developed an organised franchise business system works well and produces successful results. In this business model, franchisee does not have to run a business alone. Franchisors provide training programme and reference materials to assist franchisee which help him in dealing with whatever comes up on the way of doing business. They also give marketing assistance with proven tools and strategies. Many companies also offer ongoing assistance to franchisees in the form of manuals and other documentation, as well as staff also.

To conclude, franchise business model is usually one of the most cost effective ways for a franchisor and franchisee for doing business. A franchisor makes profit by selling more franchises while franchisee makes a profit from each sale. Never the less, it is not the only critical for a company to select potential partner but a prospective investor should also do due diligence before buying a franchise.

For more information related to this franchising, franchise please visit: franchiseindia.com

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Tag Words: franchise, franchising

Categories: Franchises

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