There are advantages and disadvantages in buying a franchise rather than buying or starting an independent business. Some of these are listed here.
Advantages:
Note: not all franchise systems will include these factors listed below.
association with a well established brand, reputation and product or service;
assistance with site selection, lease negotiation, site development, builders and shop fitters;
assistance with outlet design and equipment purchasing;
initial management training and continuing management assistance;
access to group/national market research, along with advertising and merchandising assistance;
access to established standard procedures, operating manuals and stock control systems;
assistance in securing finance and sometimes financial assistance in establishing the business;
access to financing packages which may be more attractive and easier to access than for non franchised businesses; and
access to established financial systems and checks which can provide early warning signals to highlight trouble spots.
Disadvantages:
less autonomy in some business decisions (franchisees generally have to operate the business according to the franchisor's operations manual);
restricted territory in which you may operate and/or promote your business;
ongoing payment of fees to the franchisor;
less control if you decide to sell your franchise business as there will be a set of procedures for you to follow, including getting the franchisor's approval of the buyer;
if you sell the business you will usually have to pay a fee to the franchisor as outlined in the franchise agreement;
restraint of trade provisions on the sale or termination of the franchise that may be more onerous than required if a non franchised business is sold;
at the end of the franchise term, the franchisor is not obliged to renew the franchise, in which case the business and its goodwill revert to the franchisor.
There are advantages and disadvantages in buying a franchise rather than buying or starting an independent business. Some of these are listed here.Advantages:Note: not all franchise systems will include these factors listed below.association with a well established brand, reputation and product or service;assistance with site selection, lease negotiation, site development, builders and shop fitters;assistance with outlet design and equipment purchasing;initial management training and continuing management assistance;access to group/national market research, along with advertising and merchandising assistance;access to established standard procedures, operating manuals and stock control systems;assistance in securing finance and sometimes financial assistance in establishing the business;access to financing packages which may be more attractive and easier to access than for non franchised businesses; andaccess to established financial systems and checks which can provide early warning signals to highlight trouble spots.Disadvantages:less autonomy in some business decisions (franchisees generally have to operate the business according to the franchisor's operations manual);restricted territory in which you may operate and/or promote your business;ongoing payment of fees to the franchisor;less control if you decide to sell your franchise business as there will be a set of procedures for you to follow, including getting the franchisor's approval of the buyer;if you sell the business you will usually have to pay a fee to the franchisor as outlined in the franchise agreement;restraint of trade provisions on the sale or termination of the franchise that may be more onerous than required if a non franchised business is sold;at the end of the franchise term, the franchisor is not obliged to renew the franchise, in which case the business and its goodwill revert to the franchisor.
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