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Explain the Advantages of Franchising, Both for the Franchisor and Franchisee. - Entrepreneurship

Answer in Brief

 Explain the advantages of franchising, both for the franchisor and franchisee.

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Solution

 Merits of Franchising:

  1.  Proven idea: Business is based on a proven idea. Success of the product can be checked in the market.
  2. Profit from brand recognition:Franchises develop an image in the marketplace. This saves both time and money of advertising, promotion, recognition, etc. Image of the product is a favourable one and is in the minds of consumers.
  3. Recognized brand name and trademarks: Entrepreneur gets a recognized brand name and trademarks. Benefit from any advertising or promotion by the parent company automatically benefits the franchise.
  4. Support from parent company: The franchisor gives support in the form of training, help setting up the business, a manual telling how to run the business and ongoing advice.
  5. Exclusive rights of the territory: The franchisor can’t sell any other franchises in the same territory which leads to the creation of monopoly power in the territory.
  6. Easier Financing: Financing the business becomes easier due to the associated brand name. Banks are more likely to lend money to buy a franchise with a good reputation.
Concept: Franchising
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APPEARS IN

CBSE Class 12 Entrepreneurship Textbook
Chapter 4 Enterprise Growth Strategies
Very long answer (exceed 250 words) | Q 1 | Page 172
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