Consider the dynamics, opportunities for acquiring a franchise, or franchising y
ID: 463039 • Letter: C
Question
Consider the dynamics, opportunities for acquiring a franchise, or franchising your business model, as well as the due diligence required. While some might not regard franchise acquisition as entrepreneurship in its purest form, it nonetheless is a viable option for those seeking quasi-independent opportunities, as exemplified in "Franchise on a Smaller Scale". Please refer to the article, but expand beyond its content through text and Module readings to consider the broad dynamics and challenges, positive and negative, for franchise acquisition and management.
Explanation / Answer
Franchising is a business concept in which the brand image is shared to number of entrepreneurs by taking royalty from them. Parent company which first established business operations might not able to expand their business territory due to its financial and other constrains. This will offer a business opportunity and benefits to franchisee as well as franchiser.
But every coin will have a head on one side and tail on another side in the same way every business will have positives and negatives to overcome.
POSSITIVES OF FRANCHISE ACQUISTION AND MANAGEMNT:-
Provides Strong Customer base :
When coming to the franchise business concept we can say it might be easy to start a business by investing an amount but it is difficult to run and sustain until we get a brand image or popularity. This brand image will be provided to franchise by its parent company. It will create a potential customer base for franchise.
Less start up investment:
Now a days parent companies were coming up with different franchise business concepts such as food truck, kiosks, food-court counter or a traditional restaurants as specified in the article “Franchise on a smaller scale”. This will allow new enterprnures to start business with a low investment and guaranteed business.
Operational:
Parent company will provide a strong support to franchise in day to operations like technical, administrative. Effective quality control by the parent company is one of the advantage franchise business concept.
Research and Development :
Parent companies will take care of research and development to develop new product range and to change their products according to customer needs.
POSSITIVES OF FRANCHISE ACQUISTION AND MANAGEMNT:-
Cost:
Initial Investment might be more than you expected which includes franchise fee, royalty , infrastructure etc. franchise should be designed and managed as per the norms of parent company.
More Supervisor:
Supervision of franchisor might be more on franchise which will dissatisfy us in our day to day operations.
Training:
More training is needed to staff as new product and technologies when adopted by the parent company.
Competition:
Competition will be more in the franchise business concept as they ready to offer business opportunities to every every entrepreneur who is willing to invest.
More Risk:
Franchiser will only share profits not the losses which franchise gets. So it is our own risk that we should ready to take.