Franchising is a system where a large entity known as the Franchisor grants licenses to other entities to sell their products/services under their brand name. This has been in existence since the 1920s but has gained popularity only in the last five decades. There are several benefits of entering into this business model, which is described below:
Advantages of Franchising Business
1) Fast Growing Sector that Generates Employment Opportunities for Millions of People
Many new companies enter this lucrative market every year. So, there are ample opportunities available for someone who enters this sector through franchising. In addition, franchisees can also play an important role by generating employment opportunities in the unorganized sector.
2) Great Way to Keep the Brand Alive and Well
This business model is often used by giant companies that want to expand their brand value globally without changing their original product or service. For example, when Pepsi tied up with KFC in India, they wanted to introduce KFC’s fried chicken in small towns and villages where this chain was not available before. This move helped them keep their brand alive and well even in smaller towns, whereas it would’ve been difficult otherwise due to higher costs of establishing a physical presence everywhere. The same holds for several other giants like McDonald’s, Subway, etc. When these brands started decades ago, they partnered with local entrepreneurs; who invested time, money, and expertise in making and serving their products. This allowed these giants to expand their business quickly and maintain their brand image worldwide, even today!
3) Access to Expertise, Resources, and Experience
As a franchisee, you can access resources such as logo design, marketing plan, product development, brand standards, etc., which you might not achieve yourself or via your team. You also get access to join an international network of other franchisees that join hands together for business promotion across the globe. It is also useful if an enterprising person wants to start his/her own company but doesn’t have experience selling products or setting up physical infrastructure. In this case, franchising can prove beneficial since it walks you step by step to learn each aspect before selling your products.
4) Minimum Investment Required
It is also a good idea to enter into franchising since it allows the franchisee to run his/her business with minimum investment compared to other business models. This makes it an attractive option for someone looking for entrepreneurship that comes without major risks involved. For example, even if one chooses to invest in real estate property, he/she can either lease out the space to their company or use it for their commercial purposes, making it more profitable than bank fixed deposits! Also, one does not have to maintain an inventory of goods which are often tedious and expensive.
In conclusion, it can be said that Advantages of Franchising have a great potential of earning profits either as a franchisee or as a franchise owner.
