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Sample Essay on Franchising Pros and Cons

Franchising Pros and Cons

After establishing successful businesses, entrepreneurs often wonder whether franchising is a good way of expanding operations of their businesses. This is when they consider the franchising pros and cons. A franchise is basically a business that is owned individually and operated using guidelines that another company provides.

The company that provides guidelines is known as the franchiser. A business can reduce risk that is associated with investment by tapping resources of another organized that is more developed. However, just like any other business venture franchising has its pros and cons.

Pros

Among the pros of franchising include having a recipe for success. A business that gets guidelines from the franchiser basically gets the formula for success. This is because it uses information and guidelines that the franchiser has used to succeed. The franchise formula that is used has been tried and proven to work effectively at the marketplace. In addition, franchising come with the benefits of profitability and efficiency for the franchiser and franchisee which results in uniform coordination and better results.

Franchising also allows more access to the best talents. This is because franchising is a good way of finding talented individuals who can manage the location where the new firm is and with little incentives they can work harder. The hardest working and most qualified individuals prefer working or investing in businesses that are already running to get profit instead of salary. Thus, by franchising an organization has high chances of getting talented persons to build the business.

Franchising also allows for capital expansion. This is because the franchisees pay when buying outlets in the chain of the main organization which makes it easier to grow the locations of the main organization without tapping much capital. Thus, apart from allowing for capital expansion franchising also minimizes the risk for growth.

Cons

Among the cons of franchising include less control of the franchisees or mangers. The top managers of the established organization cannot tell franchisees what they should do the way an employer tells employees. This is because franchisees operate just like any other independent business.

Franchising also results in a weaker core-community. This makes it difficult to get the franchisees work together like it is the case for store managers hired by the franchiser.

In addition, there are challenges when it comes to innovation. This is because innovating with franchising is difficult when you have different outlets run by independent managers. After generating an idea, one has to see it to the franchisees so that they can accept it.

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